1. A business contemplates building a new manufacturing facility and will need to seek loanable funds...

 

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1. A business contemplates building a new manufacturing facility and will need to seek loanable funds of $130 million. It expects that the new facility will yield a 12% return on investment (ROI). What is the current loanable funds market equilibrium rate depicted in the graph below? Given the current loanable funds market equilibrium depicted in the graph below, is it likely that the firm will borrow the money to build the new facility? Why? MALKO M a r k I n t REC R 16% 12% 8% 4% 0 D1 S1 S1 $150 $300 $450 $600 Quantity of Loanable Funds (in millions) D1 Description: A graph showing the supply, in a red straight line rising to the right, and demand, in a straight blue line descending to the right, for loanable funds with the market interest rates on the vertical axis and money available on the horizontal axis. Initial equilibrium is at 8% interest rate and 300 million dollars. El 1. A business contemplates building a new manufacturing facility and will need to seek loanable funds of $130 million. It expects that the new facility will yield a 12% return on investment (ROI). What is the current loanable funds market equilibrium rate depicted in the graph below? Given the current loanable funds market equilibrium depicted in the graph below, is it likely that the firm will borrow the money to build the new facility? Why? MALKO M a r k I n t REC R 16% 12% 8% 4% 0 D1 S1 S1 $150 $300 $450 $600 Quantity of Loanable Funds (in millions) D1 Description: A graph showing the supply, in a red straight line rising to the right, and demand, in a straight blue line descending to the right, for loanable funds with the market interest rates on the vertical axis and money available on the horizontal axis. Initial equilibrium is at 8% interest rate and 300 million dollars. El 1. A business contemplates building a new manufacturing facility and will need to seek loanable funds of $130 million. It expects that the new facility will yield a 12% return on investment (ROI). What is the current loanable funds market equilibrium rate depicted in the graph below? Given the current loanable funds market equilibrium depicted in the graph below, is it likely that the firm will borrow the money to build the new facility? Why? MALKO M a r k I n t REC R 16% 12% 8% 4% 0 D1 S1 S1 $150 $300 $450 $600 Quantity of Loanable Funds (in millions) D1 Description: A graph showing the supply, in a red straight line rising to the right, and demand, in a straight blue line descending to the right, for loanable funds with the market interest rates on the vertical axis and money available on the horizontal axis. Initial equilibrium is at 8% interest rate and 300 million dollars. El

Answer rating: 100% (QA)

Answer Answer 1 Yes the company is likely to borrow money for new investments This is because the equilibrium interest rate in the market is 8 and the desired return on investment is 4 which is greate... View the full answer