A firm is considering the purchase of a piece of equipment that will add 200 per year to the firm's revenue forever. If the interest rate is 10 percent, the firm will purchase the equipment so long as it costs less than
a. 1,000
b. 2,000
c. 4,000
d. 6,000
e. 8,000
Question 2
From the U.S. perspective, a drop in the price of foreign exchange means that
a. fewer U.S. dollars are needed to purchase foreign currency
b. more U.S. dollars are needed to purchase foreign currency
c. worldwide, imports will become more expensive
d. worldwide, exports will become cheaper
e. transaction costs on international markets will decrease
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