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Author Question: You borrow $10,000 at an interest rate of 5% to open Movies Galore, a DVD rental store. You will ... (Read 73 times)

renzo156

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Question 1

Assume that the current interest rate is 6%. You invest $10,000 of your own money in a restaurant that you own and operate. The normal return on this investment is


◦ $0, as you used your own money.
◦ $600, as that is the interest forgone by not lending the money to someone else at a 6% interest rate.
◦ $10,000, as that is the amount invested in the restaurant.
◦ $10,600, the amount invested plus the interest charge on the investment.

Question 2

You borrow $10,000 at an interest rate of 5% to open Movies Galore, a DVD rental store. You will earn an economic profit if


◦ the return on your investment is between 0 and 5%.
◦ the return on your investment is 5%.
◦ the return on your investment is greater than 5%.
◦ the return on your investment is 10% or greater.


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Marked as best answer by renzo156 on Apr 19, 2019

Anna

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