The q-theory of investment states that firms should add physical capital whenever
A) the value of q is greater than 1
B) the value of q is less than 1
C) the value of q is lower than the market interest rate
D) the replacement cost of capital is equal to the rental cost of capital
E) the market value of the firm divided by the replacement cost of capital is less than 1
Correct Answer:
Verified
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