Author Question: An increase in the rate of depreciation will cause the discounted present value of expected profits ... (Read 46 times)

jc611 · **on:** Jun 30, 2018

An increase in the rate of depreciation will cause the discounted present value of expected profits to

A) decrease.
B) increase.
C) remain unchanged if the real interest rate increases by the same amount.
D) none of the above

Question 2

For this question, assume that expected inflation is zero. In this situation, we know that

A) the nominal and real interest rates are equal.
B) the nominal interest rate will exceed the real interest rate.
C) the real interest rate will exceed the nominal interest rate.
D) the real interest will be zero.
E) the real interest rate is negative.