Assume that fast-food restaurants generally provide an roi of 14%, but that such a restaurant near a college campus has an roi of 19% because its relatively large volume of business generates an above-average turnover (sales/assets). the replacement value of the restaurant’s plant and equipment is $206,000. if you were to invest that amount in a restaurant elsewhere in town, you could expect a 14% roi. required: a-1. would you be willing to pay more than $206,000 for the restaurant near the campus?

Which of the following best describes the economic effect that results when the government increases interest rates and restricts the lending of money? a. borrowing money becomes more expensive and there is less investment in production. b. the economy grows as investments result in larger profits. c. government spending drives up prices because of greater competition for goods and services. d. consumers save more money and spend less buying goods and services.

Determine if the following statements are true or false. an increase in government spending can crowd out private investment. an improvement in the budget balance increases the demand for financial capital. an increase in private consumption may crowd out private investment. lower interest rates can lead to private investment being crowded out. a trade balance in sur+ increases the supply of financial capital. if private savings is equal to private investment, then there is neither a budget sur+ nor a budget deficit.

In the fall of 2008, aig, the largest insurance company in the world at the time, was at risk of defaulting due to the severity of the global financial crisis. as a result, the u.s. government stepped in to support aig with large capital injections and an ownership stake. how would this affect, if at all, the yield and risk premium on aig corporate debt?