Interest
Rates
Many managers do not
understand the various ways that interest rates can affect business decisions.
For example, if your company decided to build a plant with a 30-year life and
short-term debt financing (renewed annually), the cost of the plant could
skyrocket if interest rates were to return to their previous highs of 12% to
14%. On the other hand, locking into high, long-term rates could be very costly
also with a long period when low short-term interest rates were to be
available. As you can see, the ability to know your economic environment and
its impact on projected interest rates can be crucial to making good financing
decisions.
Post
by Day 3:
·
Describe two to three
macroeconomic factors that influence interest rates in general. Explain the
effects of each factor on interest rates.
·
Now think about the industry
in which you are employed or one in which you have past experience. To what
macroeconomic factors is your industry most sensitive?
·
Describe two contemporary
factors that seem to be impacting your industry today, and identify their
impacts on the interest rates experienced within your chosen industry.
