Figure 15-2 The Firm’s Optimal Capital Stock
maximizing firm will go on adding to its stock of capital until the present
value of the stream of MRPs generated by the last unit added is equal to
the purchase price of that unit.
Figure 15-2 continues our earlier example of a graphic-design firm
considering the purchase of a specialized computer. In this case, however,
the firm is determining how many computers it wants to own and so must
compare the purchase price and the present value of the stream of MRP
produced by each successive computer. Because the MRP of each
computer declines as the firm uses more of them, the result is a negative
relationship between the purchase price of the computer and the quantity
the firm chooses to own.
The firm’s optimal capital stock is chosen so that the present value of
the future MRPs on the last unit of capital is no less than its purchase
price. In this example, each computer delivers a stream of MRPs that
begins now and lasts for two years, and the interest rate is 6 percent per
year. The second column in the table shows the diminishing marginal