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Take a Test- Aiman Tariq a Secure https://www.mathxl.com/Student/PlayerTest.aspx?testld-183283381&centerwineyes; ECO 211 875 SUMMER 2018 Ai Quiz: Chapter 12 Quiz " This Question: 1 pt 15 of 16 (13 complete) Scott's Scottish Golf Links is contemplating an investment of $100,000 in new groundskeeping equipment. Management of this company predict a 9.9 percent annual return on this investment. The current market rate of interest is 9.4 percent. Scott's Scottish Golf Links will O A. not make the investment since the cost is greater than the expected return. O B. make the investment since the cost is less than the expected return. ° C. make the investment since the cost is greater than the expected return. O D. not make the investment since the cost is less than the expected return. At which of the market rates of interest below would Scott's Scottish Golf Links be inclined to make the investment? OA. 3.5%. OB, 296.

Explanation / Answer

Right Answer is (C)

Question does not speak about other cost but opportunity cost.

9.4 % is opportunity cost of making investment in equipments. while Returns on investment is expected to be 9.9 %.

Hence, Return is greater than opportunity cost.

Hence, investment shall be made.

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