The firm in the table below produces denim jeans and each unit of capital represents one sewing machine. The MRP for each of machines 10 through 14 is provided. Each sewing machine delivers a stream of MRPs beginning one year from now, for a total of 2 years. Suppose that after 2 years each sewing machine is worth nothing. $$\begin{array}{l}
\begin{array} { | l | l | }
\hline \text { Number of } & \text { Annual MRP } \
\text { Sew ing Machines } & \
\hline 10 & \$ 2000 \
\hline 11 & \$ 1800 \
\hline 12 & \$ 1600 \
\hline 13 & \$ 1400 \
\hline 14 & \$ 1200 \
\hline
\end{array}\
\text { TABLE 15- } 2
\end{array}$$
-Refer to Table 15- 2. If the interest rate is 4% and the purchase price of a sewing machine is $2000, what is the optimal capital stock (number of sewing machines) for this firm?

Question

The firm in the table below produces denim jeans and each unit of capital represents one sewing machine. The MRP for each of machines 10 through 14 is provided. Each sewing machine delivers a stream of MRPs beginning one year from now, for a total of 2 years. Suppose that after 2 years each sewing machine is worth nothing. $$\begin{array}{l}
\begin{array} { | l | l | } 
\hline \text { Number of } & \text { Annual MRP } \
\text { Sew ing Machines } & \
\hline 10 & \$ 2000 \
\hline 11 & \$ 1800 \
\hline 12 & \$ 1600 \
\hline 13 & \$ 1400 \
\hline 14 & \$ 1200 \
\hline
\end{array}\
\text { TABLE 15- } 2
\end{array}$$
-Refer to Table 15- 2. If the interest rate is 4% and the purchase price of a sewing machine is $2000, what is the optimal capital stock (number of sewing machines) for this firm?

Quizplus · Accepted Answer

The Answer of The firm in the table below produces denim jeans and each unit of capital represents one sewing machine. The MRP for each of machines 10 through 14 is provided. Each sewing machine delivers a stream of MRPs beginning one year from now, for a total of 2 years. Suppose that after 2 years each sewing machine is worth nothing. $$\begin{array}{l}
\begin{array} { | l | l | } 
\hline \text { Number of } & \text { Annual MRP } \
\text { Sew ing Machines } & \
\hline 10 & \$ 2000 \
\hline 11 & \$ 1800 \
\hline 12 & \$ 1600 \
\hline 13 & \$ 1400 \
\hline 14 & \$ 1200 \
\hline
\end{array}\
\text { TABLE 15- } 2
\end{array}$$
-Refer to Table 15- 2. If the interest rate is 4% and the purchase price of a sewing machine is $2000, what is the optimal capital stock (number of sewing machines) for this firm?

The Firm in the Table Below Produces Denim Jeans and Each