Choose an appeal company that is publically traded. Imagine the company is planning on building another facility to make garments. This company will need to spend at least $1,000,000.00 to build the plant. The company has decided to take a loan to pay for the plant. The company has the choice of starting construction today or in 6 months. Looking at today’s interest rates, compare them to rates of 6 months ago. In your opinion should the company begin construction today or 6 months from now?

The time value of money is the foundation of for all of finance. each

When determining whether to start construction on a new facility today or 6 months from now, one must consider both the current and future cost of borrowing capital. As such, it is important to compare interest rates between today and 6 months ago in order to determine which option would be more financially beneficial for the company.

For instance, if the current rate is lower than 6 months ago then starting construction immediately may be more attractive since this would allow them to potentially save money by locking-in these lower rates – resulting in a smaller overall loan payment. Conversely, if interest rates have risen over that period then waiting another 6 months before beginning work could prove advantageous as they would avoid paying higher costs up front.

Ultimately, while many factors will ultimately influence this decision – including market conditions and potential risks associated with each approach – it’s essential for companies to take into account both short-term and long-term financial implications when deciding when best to begin construction on any type of large-scale project.