Answer to Question #90194 in Finance for Arushi

Question #90194
Explain why a firm $1 million in the bank would care about the market interest rate when investing $10 million into a new building, after all they do not need to borrow money. When would they undertake this investment project?
1
Expert's answer
2019-05-29T09:25:55-0400

a firm would care about the market interest rate when investing $10 million into a new building, because the present value of this investment will decrease over time. They would undertake this investment project, if the net present value of this project is positive.


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