6. A firm uses lumber and labour to produce chairs in a factory that it bought...

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6. A firm uses lumber and labour to produce chairs in a factory that it bought for $8 million. a. Which of its factor inputs are measured as flows and which as stocks? How would your answer change if the firm had leased a factory instead of buying one? (10 marks) b. How does one calculate the NPV of an investment project? If all cash flows for a project are certain, what discount rate should be used to calculate NPV? (15 marks) 6. A firm uses lumber and labour to produce chairs in a factory that it bought for $8 million. a. Which of its factor inputs are measured as flows and which as stocks? How would your answer change if the firm had leased a factory instead of buying one? (10 marks) b. How does one calculate the NPV of an investment project? If all cash flows for a project are certain, what discount rate should be used to calculate NPV? (15 marks)