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 129 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
Great answer, keep it coming :)


tkempin

  • Member
  • Posts: 332
Reply 3 on: Yesterday
:D TYSM

 

Did you know?

The people with the highest levels of LDL are Mexican American males and non-Hispanic black females.

Did you know?

Tobacco depletes the body of vitamins A, C, and E, which can result in any of the following: dry hair, dry skin, dry eyes, poor growth, night blindness, abscesses, insomnia, fatigue, reproductive system problems, sinusitis, pneumonia, frequent respiratory problems, skin disorders, weight loss, rickets, osteomalacia, nervousness, muscle spasms, leg cramps, extremity numbness, bone malformations, decayed teeth, difficulty in walking, irritability, restlessness, profuse sweating, increased uric acid (gout), joint damage, damaged red blood cells, destruction of nerves, infertility, miscarriage, and many types of cancer.

Did you know?

Individuals are never “cured” of addictions. Instead, they learn how to manage their disease to lead healthy, balanced lives.

Did you know?

People with alcoholism are at a much greater risk of malnutrition than are other people and usually exhibit low levels of most vitamins (especially folic acid). This is because alcohol often takes the place of 50% of their daily intake of calories, with little nutritional value contained in it.

Did you know?

Symptoms of kidney problems include a loss of appetite, back pain (which may be sudden and intense), chills, abdominal pain, fluid retention, nausea, the urge to urinate, vomiting, and fever.

For a complete list of videos, visit our video library