Suppose that Intel is considering building a new chip-making factory.
a. Assuming that Intel needs to borrow money in the bond market, why would an increse in interest rates affect Intel's decision about whther to bulid the factory?Explain.
b.If Intel has enough of its own funds to finance the new factory without borrowing, would an increase rates affect Intel's decision about whether to build the factory?Explain.
Answering in english
econ...關於saving,investment and financial system
2006-10-19 8:43 pm
回答 (3)
2006-10-20 8:29 am
✔ 最佳答案
a. If Intel borrows money from the bond market, as the interest rate rise, the cost of building the factory will increase. It is because Intel needs to pay more loan interests to the market. As a result, Intel may not build the factory.b. If Intel uses its own funds to set up a new factory, as the interest rate increase, the value of saving money will increase. Thus, Intel will consider to set up a new factory if the expected profit is greater than the saving interests.
2006-10-19 9:05 pm
a. As money is borrowed, increase in interest rates will increase the interests, cost of builiding the factory will be rised.
b. If money is not from borrowing, increase rate will not affect the cost of building factory.
b. If money is not from borrowing, increase rate will not affect the cost of building factory.
2006-10-19 8:47 pm
their run
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