The expected future marginal product of capital (in terms of dollars) for each level of capital.

Question

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Answer 1

Question

Chapter 4, Problem 2NP

a)

To determine

The expected future marginal product of capital (in terms of dollars) for each level of capital.

b)

To determine

The user cost of capital and the desired number of fabricators.

c)

To determine

The user cost of capital and the desired number of fabricators, when rate of interest decreases from 12% to 8%.

d)

To determine

The user cost of capital and the desired number of fabricators, when 40% of tax on company’s sales revenues are applicable.

e)

To determine

The number of fabricators purchased by company when a technical innovation doubles the productivity.

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1. If the MRPK is less than the cost of capital, a firm should increase its investment in physical capital. decrease its investment in physical capital. exit the industry. keep its investment in physical capital the same.

1. Hula hoop fabrications cost $100 each. The H2H company is trying to decide how many of these machines to buy. The number of hoops for each year and for each level of capital stock shown as follows: Hula Hoop have a real value of $1 each. There is no other costs besides the cost of fabricators. a. Find the expected future marginal product of capital (in terms of dollar) for each level of capital. b. If the real interest rate is 12% per year, and the depreciation rate of capital is 20% per year, find the user cost of capital (in dollar per fabricator per year). How many fabricators should H2H buy?

Distinguish between nominal and real interest rates. Which is more relevant in making investment and R&D decisions? If the nominal interest rate is 12 percent and the inflation rate is 8 percent, what is the real rate of interest?

Answer 2

Question

Chapter 4, Problem 2NP

a)

To determine

The expected future marginal product of capital (in terms of dollars) for each level of capital.

b)

To determine

The user cost of capital and the desired number of fabricators.

c)

To determine

The user cost of capital and the desired number of fabricators, when rate of interest decreases from 12% to 8%.

d)

To determine

The user cost of capital and the desired number of fabricators, when 40% of tax on company’s sales revenues are applicable.

e)

To determine

The number of fabricators purchased by company when a technical innovation doubles the productivity.

Expert Solution & Answer

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Answer 3

Question

Chapter 4, Problem 2NP

a)

To determine

The expected future marginal product of capital (in terms of dollars) for each level of capital.

b)

To determine

The user cost of capital and the desired number of fabricators.

c)

To determine

The user cost of capital and the desired number of fabricators, when rate of interest decreases from 12% to 8%.

d)

To determine

The user cost of capital and the desired number of fabricators, when 40% of tax on company’s sales revenues are applicable.

e)

To determine

The number of fabricators purchased by company when a technical innovation doubles the productivity.

Expert Solution & Answer

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Answer 4

Question

Chapter 4, Problem 2NP

a)

To determine

The expected future marginal product of capital (in terms of dollars) for each level of capital.

b)

To determine

The user cost of capital and the desired number of fabricators.

c)

To determine

The user cost of capital and the desired number of fabricators, when rate of interest decreases from 12% to 8%.

d)

To determine

The user cost of capital and the desired number of fabricators, when 40% of tax on company’s sales revenues are applicable.

e)

To determine

The number of fabricators purchased by company when a technical innovation doubles the productivity.

Expert Solution & Answer

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Answer 5

Chapter 4, Problem 2NP

a)

To determine

The expected future marginal product of capital (in terms of dollars) for each level of capital.

b)

To determine

The user cost of capital and the desired number of fabricators.

c)

To determine

The user cost of capital and the desired number of fabricators, when rate of interest decreases from 12% to 8%.

d)

To determine

The user cost of capital and the desired number of fabricators, when 40% of tax on company’s sales revenues are applicable.

e)

To determine

The number of fabricators purchased by company when a technical innovation doubles the productivity.

Answer 6

Chapter 4, Problem 2NP

a)

To determine

The expected future marginal product of capital (in terms of dollars) for each level of capital.

Answer 7

Chapter 4, Problem 2NP

a)

To determine

The expected future marginal product of capital (in terms of dollars) for each level of capital.

Answer 8

b)

To determine

The user cost of capital and the desired number of fabricators.

Answer 9

b)

To determine

The user cost of capital and the desired number of fabricators.

Answer 10

c)

To determine

The user cost of capital and the desired number of fabricators, when rate of interest decreases from 12% to 8%.

Answer 11

c)

To determine

The user cost of capital and the desired number of fabricators, when rate of interest decreases from 12% to 8%.

Answer 12

d)

To determine

The user cost of capital and the desired number of fabricators, when 40% of tax on company’s sales revenues are applicable.

Answer 13

d)

To determine

The user cost of capital and the desired number of fabricators, when 40% of tax on company’s sales revenues are applicable.

Answer 14

e)

To determine

The number of fabricators purchased by company when a technical innovation doubles the productivity.

Answer 15

e)

To determine

The number of fabricators purchased by company when a technical innovation doubles the productivity.

Answer 16

Expert Solution & Answer

Answer 17

Expert Solution & Answer

Answer 18

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Answer 19

Ch. 4 - Prob. 1RQ Ch. 4 - Prob. 2RQ Ch. 4 - Prob. 3RQ Ch. 4 - Prob. 4RQ Ch. 4 - Prob. 5RQ Ch. 4 - Prob. 6RQ Ch. 4 - Prob. 7RQ Ch. 4 - Prob. 8RQ Ch. 4 - Prob. 9RQ Ch. 4 - Prob. 10RQ

The expected future marginal product of capital (in terms of dollars) for each level of capital.

The expected future marginal product of capital (in terms of dollars) for each level of capital.

The user cost of capital and the desired number of fabricators.

The user cost of capital and the desired number of fabricators, when rate of interest decreases from 12% to 8%.

The user cost of capital and the desired number of fabricators, when 40% of tax on company’s sales revenues are applicable.

The number of fabricators purchased by company when a technical innovation doubles the productivity.

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Chapter 4 Solutions