A physiotherapy clinic is considering borrowing to add a second treatment room. This would allow the clinic to offer more appointments each week.
| Financial information | Amount or rate |
|---|---|
| Loan required | £75,000 |
| Previous annual interest rate | 8% |
| Revised annual interest rate | 5% |
| Expected additional annual revenue | £42,000 |
| Expected additional annual operating costs, excluding interest | £31,000 |
Analyse the likely effect of the revised interest rate on the clinic's decision to add the second treatment room.
82 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.