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In Firm A, the profit for the current year is t. Suppose Firm A plans to rent its machinery at the real rate of interest.
In Firm A, the profit for the current year is t. Suppose Firm A plans to rent its machinery at the real rate of interest. The current price of the machinery is 40t, the real rate of interest is 2% per year of the current price, and the rate of depreciation is 6% per year of the current profit. On the basis of static expectations, the expected present value of profits is 1.16t (Round your answer to two decimal places.) (Properly format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts. E.g., a subscript can be created with the _ character.) Suppose Firm A is planning to invest in a machinery today that yields a profit of 300 in year t+1. The constant rate of depreciation is 10% per year, the real rate of interest is 3% for year t+1, and this rate increases by 20 basis points every year (1%=100 basis points ). The expected present value of the profit for year t+5 is assuming that the profit increases at a rate of 5% per year. (Round your answer to two decimal places.) In Firm A, the profit for the current year is t. Suppose Firm A plans to rent its machinery at the real rate of interest. The current price of the machinery is 40t, the real rate of interest is 2% per year of the current price, and the rate of depreciation is 6% per year of the current profit. On the basis of static expectations, the expected present value of profits is 1.16t (Round your answer to two decimal places.) (Properly format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts. E.g., a subscript can be created with the _ character.) Suppose Firm A is planning to invest in a machinery today that yields a profit of 300 in year t+1. The constant rate of depreciation is 10% per year, the real rate of interest is 3% for year t+1, and this rate increases by 20 basis points every year (1%=100 basis points ). The expected present value of the profit for year t+5 is assuming that the profit increases at a rate of 5% per year. (Round your answer to two decimal places.)
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