Question: 5. The principal reason the liquidity preference (or demand for money) schedule is downward sloping is due to the __motive for holding money. (1)

5. The principal reason the liquidity preference (or demand for money) schedule

5. The principal reason the liquidity preference (or demand for money) schedule is downward sloping is due to the __motive for holding money. (1) 6. An investor is planning to build a biscuit factory. She estimates that her supply price for the factory will be $550,000. She sees revenue inflows of $100,000 in the first year, 150,000 in the second year, 200,000 in the third year and 250,000 in the fourth year. The bank approves her business plan and offers to lend her the capital at 6% per year. (6) a) Will she go ahead with the project? Why? Show all working to arrive at this decision. b) What is her exact MEC for this project?

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