If the expected earnings of an investment project exceed all expenses except interest payments,
A)business firms will not undertake the project.
B)business firms will undertake the project and raise prices later.
C)business firms will not undertake the project but will borrow the funds.
D)consumers will get lower prices.

Question

Quizplus · Accepted Answer

If the expected earnings of an investment project exceed all expenses except interest payments, it means the project is not profitable enough to cover the cost of borrowing (interest payments). Therefore, business firms will likely not undertake the project.

If the Expected Earnings of an Investment Project Exceed All