Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

2. (15 points) Fred's Frisbees is trying to determine how many Frisbee pressing machines to buy for its new factory. The real price of a

image text in transcribed
image text in transcribed
2. (15 points) Fred's Frisbees is trying to determine how many Frisbee pressing machines to buy for its new factory. The real price of a new pressing machine is 7000 Frisbees. The depreciation rate on these Frisbee presses is equal to 15% per year. The real interest rate is 7%. The expected future marginal product of these fabricating machines is given by the expression 4540 5K, measured in Frisbees. (a) What is the user cost of capital? (b) What is the prot-maximizing number of Frisbee presses for Fred's to purchase for its new factory? (0) Before purchasing the machines Fred's nds that it will be subject to a new tax of 50 percent on all its revenue. Now what is the prot maximizing number of machines for Fred's to purchase

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Bank Management

Authors: Timothy W Koch, Steven Scott MacDonald, S Scott MacDonald

6th Edition

0324289278, 9780324289275

More Books

Students also viewed these Economics questions