#1 Interest rates, the cost of money, influence most all factors related to personal and corporate capital budgeting. The more obvious personal information for the cost of money is the rates associated with a mortgage or car loan. As a CFO you would “shop” interest rates to find the best rate for your financing needs.
- Would you, as the CFO, finance your projects as soon as possible if cost of capital was expected to drop? Please explain.
- More importantly where do you find the information to analyze expected changes in interest rates?
#2 Time Value of Money, Practical Applications in Business and Personal Decisions