A firm can borrow capital to invest and faces a marginal revenue (MR) for each unit of capital (K) invested is as follows: 1st K has MR $2.50; 2nd K has MR $2.0; 3rd K has MR $1.60; 4th K has MR $1.45; 5th K has MR $1.38; and 6th K has MR $1.34. If the interest rate is 39%, then the firm's optimal demand for capital is

3

4

5 6

A company can take out a $150,000 loan and make a repayment of $156,750 in one year, or it can issue discount bonds that have a yield of 4.5%. In this case, to raise funds as cheaply as possible, the company should

issue the bonds

take out the loan

do either, the rate is the same

all of the above are correct