Author Question: Michelle Martelle, CEO of Michelle Enterprises, has five projects in hand and is considering which, ... (Read 125 times)

Tirant22 · **on:** Jun 30, 2018

Michelle Martelle, CEO of Michelle Enterprises, has five projects in hand and is considering which, if any, to undertake. Their expected returns are: project A = 12 percent, project B = 7 percent, project C = 10 percent, project D = 9 percent, and project E = 8 percent. If the interest rate is 8.5 percent, which, if any, investment projects will she accept?
a. Only project A.
b. Projects A and C.
c. Projects A, C and D.
d. Projects A, C, D and E.
e. Projects A, B, C, D and E.

Question 2

Crowding out refers to the situation in which:
a. borrowing by the federal government raises interest rates and causes firms to invest less.
b. foreigners sell their bonds and purchase U.S. goods and services.
c. borrowing by the federal government causes state and local governments to lower their taxes.
d. increased federal taxes to balance the budget causes interest rates to increase and consumer credit decreases.