Question

an automotive company has $10 million in cash, which would cover the cost of building a new factory. suppose that recently, the interest rate has increased. which of the following correctly describes the effect of a higher interest rate on the decision to build a new factory?

Answer 1

A higher interest rate would likely make it more expensive for the automotive company to borrow money to build the new factory, as the cost of borrowing would increase. This could make it more difficult for the company to finance the construction of the factory, and could lead to the company deciding against building the factory.