Top Posters
Since Sunday
9
d
7
o
6
j
6
n
5
d
5
r
5
H
5
c
5
l
5
i
5
m
5
New Topic  
rsteel rsteel
wrote...
Posts: 61
Rep: 0 0
3 months ago
Explain the importance of considering interest rate fluctuations in financial planning.
Textbook 

Business in Action


Edition: 9th
Authors:
Read 15 times
1 Reply
Replies
Answer verified by a subject expert
bijin05bijin05
wrote...
Posts: 37
Rep: 0 0
3 months ago
Sign in or Sign up in seconds to unlock everything for free
More questions for this book are available here
Regardless of how financially solid a company is, the cost of money will vary over time because interest rates fluctuate. The prime interest rate (often called simply the prime) is the lowest interest rate offered on short-term bank loans to preferred borrowers. The prime changes irregularly and, at times, quite frequently. Sometimes it changes because of supply and demand; at other times, it changes because the prime rate is closely tied to the discount rate, the interest rate that the Federal Reserve charges on loans to commercial banks and other depository institutions. 
Companies must take such interest rate fluctuations into account when making financing decisions. For instance, a company planning to finance a short-term project when the prime rate is 3 percent would want to reevaluate the project if the prime rose to 6 percent a few months later. Even though companies try to time their borrowing to take advantage of drops in interest rates, this option is not always possible.

This verified answer contains over 160 words.
1

Related Topics

wrote...
Posts: 61
Credits: 10

3 months ago
Thanks
wrote...
Posts: 72
Credits: 30

Yesterday
Correct Slight Smile TY
wrote...
Posts: 72
Credits: 30

2 hours ago
Thanks for your help!!
New Topic      
Explore
Post your homework questions and get free online help from our incredible volunteers
  88 People Browsing
 190 Signed Up Today
Related Images
 495
 195
 142
Your Opinion
What percentage of nature vs. nurture dictates human intelligence?
Votes: 308