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"You Decide" Essay
You own a thriving book store in a major college town. You have been talking with your CPA about borrowing $5,000,000 to finance a larger and more modern building. One option is to issue 20-year bonds with a fixed rate of 8% while another option is to issue 20-year bonds with a variable rate of one-year LIBOR (London Interbank Offered Rate) plus 5%. For the first year, this will result in a 6.2% rate, but the rate will be adjusted annually. The current market interest rate is 8%.
What things should you consider in making the decision about which borrowing option is better for your company?
Facility Location
The process of determining the optimal placement for operations, considering factors like cost, accessibility, and proximity to markets.
Capacity Allocation
The process of determining and assigning the available capacity or resources of a facility, system, or organization to various tasks or projects to optimize efficiency and output.
Responsiveness
The ability of a company to respond to changes in demand, production, supply, and the market environment quickly and effectively.
Locate Facilities
The process of determining the most strategic places for operations, considering factors like cost, accessibility, and supply chain efficiency.
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