Asked by
Carlos Andres
on Oct 25, 2024
Verified
In the consumer's NPV decision, the correct value for the interest rate R is:
A) the interest rate that could be earned in a savings account when the consumer must borrow to finance the purchase.
B) the interest rate that would have to be paid on a loan when the consumer could pay for the purchase with funds in a savings account.
C) the interest rate charged for the loan when the consumer must borrow to finance the purchase.
D) the prime rate, irrespective of whether when the consumer must borrow to finance the purchase.
E) the prime rate plus the rate of inflation as measured by the CPI, irrespective of whether when the consumer must borrow to finance the purchase.
NPV Decision
A decision-making process that involves calculating the Net Present Value of a project to determine its financial viability.
Interest Rate
The expense levied by a lender on a borrower, expressed as a percentage of the principal, for the right to use money or property.
- Comprehend the decision-making criteria in financial matters for consumers and businesses.
Verified Answer
HT
Learning Objectives
- Comprehend the decision-making criteria in financial matters for consumers and businesses.