Extract 1: BrightMach investment BrightMach wants to buy energy-efficient equipment. A bank offers a loan while an insurer offers cover against equipment damage. Managers expect the investment to reduce electricity costs.
| Loan information | Amount |
|---|---|
| Loan | £240,000 |
| Original annual interest rate | 7% |
| New annual interest rate | 5% |
| Expected annual electricity saving | £18,000 |
Explain one role of the bank in BrightMach's investment.
Using Extract 1, calculate the annual interest saving after the rate falls.
Analyse how the lower interest rate may affect BrightMach's investment decision.
State two financial institutions.
Explain one benefit of equipment insurance to BrightMach.
Evaluate whether the financial sector is important to BrightMach's success.
30 exam-style questions on OCR GCSE Economics 2.8 The role of money and financial markets, covering 2.8.1 Money as a medium of exchange, 2.8.2 Role of the financial sector, 2.8.3 Importance of the financial sector, 2.8.4 Interest rates and saving, borrowing, investment, and 2.8.5 Effect of interest rate changes. Each one has a worked solution and a mark scheme showing where the marks go.