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Unformatted text preview: No hassles, no worries. This is just another way to look at the many ways to consider your alternative uses of resources that you control. The return to capital is referred to as interest. Yes, interest. If you use $10,000 that you have saved to purchase a used backhoe and front-end loader, what have you given up the opportunity to earn on your $10,000? Yes, the interest you could have earned on that money had you left it in the bank. So before you purchase that backhoe and front-end loader, you better pencil your decision out to ensure that the backhoe and front-end loader will increase your profits by at least the rate of return that you could have earned on your money in the bank. This is why we call the return to capital, interest....
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This note was uploaded on 12/29/2011 for the course ECO 210 taught by Professor Malls during the Fall '10 term at SUNY Stony Brook.
- Fall '10