What if the fed raises interest rates

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a. Han can purchase a new tractor for $100,000. It will cost $10,000 per year to operate and after 3 years she can sell it for $50,000. The tractor will raise the value of her output of corn by $40,000. If she must pay 5% interest on the bank loan to purchase the tractor, what should she do? (use a calculator)

b. What if the FED raises interest rates so that Han must pay 10% on her bank loan?

c. Explain the effect of interest rates on Han’s decision in your own words.

Reference no: EM131337977

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