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Opportunity costs and Rate of return

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5. The board of directors at Ethan Manufacturing has developed the following list of investment projects for 2003.
(see attached file for data)
(a) If the interest rate is currently 8%, which projects should Ethan Manufacturing invest in?
(b) Which economic principle did you use to make this decision?

See attached file for full problem description.

9. You are considering opening a chain of coffee houses that will specialize in Kona Coffee. You have chosen four possible locations for coffee houses, with investment requirements and expected rates of return summarized below.
(see attached file for data)
If the market interest rate is 8%, which coffee houses will you open? Which coffee houses will you open if the market rate is 14%?

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This solution provides explanations for investment projects, investment requirements, and expected rates of return.

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