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### Financing Decision If... * Interest rate low * Borrow more, increase earnings * Borrow longer period * Pay off high interest loan, obtain new loan, low interest rate But if... * Interest rate high * Borrow at variable interest rate * Switch short term investment to i...

### Financing Decision If... * Interest rate low * Borrow more, increase earnings * Borrow longer period * Pay off high interest loan, obtain new loan, low interest rate But if... * Interest rate high * Borrow at variable interest rate * Switch short term investment to interest bearing securities * Reduce debt and substitute with new equity finances ### Capital Investments * Is the interest rate, minimum return company requires, new investment increase, fewer investments eventually occur ### Interest Rate Risk * Risk higher or lower profit or loss from what was expected due to uncertainty or a change in interest rate.