Assume that for the entire business sector of the economy there is $0 worth of investment projects which will yield an expected rate of return of 25 percent or more.But there are $15 worth of investments which will yield an expected rate of return of 20-25 percent; another $15 with an expected rate of return of 15-20 percent; and similarly an additional $15 of investment projects in each successive rate of return range down to and including the 0-5 percent range.Refer to the above information.If the real interest rate is 5 percent, what amount of investment will be undertaken?
A)$15
B)$30
C)$45
D)$60

Question

Quizplus · Accepted Answer

If the real interest rate is 5 percent, all investment projects with an expected rate of return greater than 5 percent will be undertaken. This includes all projects from the 5-10 percent range up to the 20-25 percent range, totaling $60 ($15 for each range).

Assume That for the Entire Business Sector of the Economy