If a firm wants to borrow $10 million and the real interest rate increases from 5 per cent to 6 per cent, then the cost of the investment has increased by
A) $6 million per year.
B) $600,000 per year.
C) $100,000 per year.
D) $1 million per year.
E) nothing because the real interest rate is the return the firm will earn on its investment.

Question

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The Answer of If a firm wants to borrow $10 million and the real interest rate increases from 5 per cent to 6 per cent, then the cost of the investment has increased by
A) $6 million per year.
B) $600,000 per year.
C) $100,000 per year.
D) $1 million per year.
E) nothing because the real interest rate is the return the firm will earn on its investment.

If a Firm Wants to Borrow $10 Million and the Real