This topic contains a solution. Click here to go to the answer

Author Question: When buying a piece of equipment, it is always best for the firm to pay cash instead of borrowing ... (Read 111 times)

torybrooks

  • Hero Member
  • *****
  • Posts: 500
When buying a piece of equipment, it is always best for the firm to pay cash instead of borrowing the funds since this renders the equipment less costly.
 
  Indicate whether the statement is true or false

Question 2

Which is a required characteristic of a perfectly competitive industry?
 
  A) There are few firms so that none can influence market price.
  B) Products are highly differentiated.
  C) Barriers to entry are high.
  D) None of the above



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

srodz

  • Sr. Member
  • ****
  • Posts: 333
Answer to Question 1

False. It depends. The opportunity cost of the capital when paying cash is the interest the firm receives on its cash reserves. This is an implicit cost. The opportunity cost of the capital when the funds are borrowed is the interest the firm must pay to the lender. This is an explicit cost. If the rate the firm receives on its cash reserves exceeds the rate at which it borrows, the firm is better off borrowing the funds to buy the equipment.

Answer to Question 2

D




torybrooks

  • Member
  • Posts: 500
Reply 2 on: Jul 1, 2018
Thanks for the timely response, appreciate it


lcapri7

  • Member
  • Posts: 350
Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

 

Did you know?

It is difficult to obtain enough calcium without consuming milk or other dairy foods.

Did you know?

People who have myopia, or nearsightedness, are not able to see objects at a distance but only up close. It occurs when the cornea is either curved too steeply, the eye is too long, or both. This condition is progressive and worsens with time. More than 100 million people in the United States are nearsighted, but only 20% of those are born with the condition. Diet, eye exercise, drug therapy, and corrective lenses can all help manage nearsightedness.

Did you know?

Nitroglycerin is used to alleviate various heart-related conditions, and it is also the chief component of dynamite (but mixed in a solid clay base to stabilize it).

Did you know?

Chronic necrotizing aspergillosis has a slowly progressive process that, unlike invasive aspergillosis, does not spread to other organ systems or the blood vessels. It most often affects middle-aged and elderly individuals, spreading to surrounding tissue in the lungs. The disease often does not respond to conventionally successful treatments, and requires individualized therapies in order to keep it from becoming life-threatening.

Did you know?

Human neurons are so small that they require a microscope in order to be seen. However, some neurons can be up to 3 feet long, such as those that extend from the spinal cord to the toes.

For a complete list of videos, visit our video library