Consider the owner of a local boutique. She is deciding if she should upgrade the storage and
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Consider the owner of a local boutique. She is deciding if she should upgrade the storage and display containers. The total cost would be $2,000, and the depreciation rate is 8% per year. The expected increase in next year’s revenue as a result of the investment is $400. Assuming an interest rate of 5%, use the marginal principle to determine whether the owner should make this investment.
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