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To determine an individual profit-maximizing firm's maximum purchase price for a unit of capital it ...

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To determine an individual profit-maximizing firm's maximum purchase price for a unit of capital it ...

To determine an individual profit-maximizing firm's maximum purchase price for a unit of capital it is necessary to

▸ know what competing firms are prepared to pay.

▸ compute the present value of the stream of benefits produced by the unit of capital.

▸ compute the future value of the stream of benefits produced by the unit of capital.

▸ know how the interest rate is related to the cost of capital.

▸ compute the rental price of the unit of capital and the interest rate.

Textbook

Microeconomics

Edition: 17^th

Author: Ragan

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