An entrepreneur is considering an investment that costs $2,000. This investment is projected to generate a total income of $2,500 after one year. To finance this, the entrepreneur must take out a one-year loan for the full amount. Under which of the following loan conditions would this investment expand the entrepreneur's set of consumption possibilities, making it a profitable venture?

Evaluating Investment and Financing Options

Analyzing an Unprofitable Investment

An individual borrows $10,000 to fund a project that is expected to yield a total income of $15,000 after one year. The interest rate on the one-year loan is 60%. True or False: This investment will expand the individual's set of possible consumption choices.

An individual is considering a project that requires an initial outlay of $5,000 and is expected to generate a total income of $5,750 one year later. To be a worthwhile venture that expands the individual's set of possible consumption choices, the interest rate on a loan used to fully finance the project must be less than ______%.

Critiquing an Investment Strategy

An investor is considering several distinct projects, each requiring a loan for the full investment cost. Match each project scenario with the correct effect on the investor's feasible set of consumption possibilities.

Analyzing a Suboptimal Investment Decision

Evaluating a Business Proposal

Modifying an Investment Proposal for Profitability