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question joe 39 s taco hut can purchase a delivery truck for 20 000 and he estimates 4283304

Question

Joe's Taco Hut can purchase a delivery truck for $20,000 and he estimates it will generate a net income (after taxes, maintenance and operating costs) of $4,000 per year. His other option is to go to work for someone else earning net income of $3,000 per year. He should:

a) purchase the truck if the real interest rate is less than 15%.

b) not purchase the truck if the real interest rate is greater than 1%.

c) purchase the truck if the real interest rate is greater than 5%.

d) purchase the truck if the real interest rate is less than 5%.

 

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