A-LevelEconomicsBasic economic ideas and resource allocation9708/12 · Oct/Nov 2014 · Q21 Mark
A firm is considering whether to buy a piece of capital equipment which will cost $2000. It estimates that the equipment will last for two years. The alternative is to lend the money to a finance company at a compound rate of interest of 5%. What is the minimum increase in revenue the firm must expect to make it worthwhile buying the equipment?
A$101
B$206
C$2001
D$2206
✓ Correct answer
D: $2206
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