Author Question: In a perfectly competitive market a firm's rental rate for a machine (v) will be given by: v = P(r + ... (Read 63 times)

hbsimmons88 · **on:** Jul 1, 2018

In a perfectly competitive market a firm's rental rate for a machine (v) will be given by: v = P(r + d) where r is the prevailing rate of interest and d is the depreciation rate. In this formula P represents
a. the present market price of the machine.
b. the initial purchase price of the machine (assuming this differs from its present market price.
c. the price of the firm's product.
d. the depreciated value of the machine.

Question 2

The present value of 1 payable in the future decreases
a. the higher r is and the sooner it is to be paid.
b. the lower r is and the sooner it is to be paid.
c. the higher r is and the longer time until it is paid.
d. the lower r is and the longer time until it is paid.