Question

Using the augmented investment demand schedule from question 8(c) and assuming that the interest rate is 10 percent, calculate the level of investment for cases a through d in question 8. 

Answer 1

the referencing question

solution

a)net recenue=cost of borrowing -annual revenues

increase in annual revenues increase the profit of investiment.

b)

if annual revenue is kept constant, increase in cost of borrowing reduces profits.

d)

the tax chnges will lead to a reduction in profit of inestiment.