Question: Managers often use the real interest rate to help them decide whether to take on a new project. REQUIRED A. What two factors are included

Managers often use the real interest rate to help them decide whether to take on a new project.

REQUIRED
A. What two factors are included in the real interest rate?
B. What economic factors could affect the two aspects you identified in part (A)? List as many factors as you can.
C. Discuss how certain you can be that interest rates will remain constant over the life of a project.
D. Does the time length of a project affect your answer to part (C)? Why or why not?

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A The real rate includes both a risk free rate and a risk premium B The risk free rate is affected b... View full answer

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