A regional food wholesaler is considering borrowing to install refrigerated storage. The expected annual return from the investment is 5.5%. The bank changes the interest rate offered for the loan as shown in the table.
| Situation | Interest rate offered on the loan |
|---|---|
| Before the change | 4% per year |
| After the change | 6% per year |
Explain why the change in the interest rate would make the investment less attractive.
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.