A regional bus operator is considering borrowing £80,000 to install charging equipment at its depot. The equipment is expected to generate an annual return of £4,400. Before the loan is agreed, the bank raises the annual interest rate on the loan from 4% to 6%.
Using the figures, explain how the rise in the interest rate is likely to affect whether the bus operator goes ahead with the charging equipment.
75 exam-style questions on AQA GCSE Economics 2.1 Introduction to the national economy, covering 2.1.1a What an interest rate is, 2.1.1b Interest rates and consumer decisions, 2.1.1c Interest rates, producer decisions and calculations, 2.1.2a UK government revenue and spending, and 2.1.2b Direct, indirect and progressive taxation. Each one has a worked solution and a mark scheme showing where the marks go.