Consider the firm's demand for capital. An increase in market interest rates will
◦ be good for all firms.
◦ not affect the price a firm is willing to pay for a machine that generates future returns.
◦ increase the amount a firm is willing to pay for a machine that generates future returns.
◦ decrease the amount a firm is willing to pay for a machine that generates future returns.
◦ be bad for all firms.