Black Oil Company considered building a service station in a new location.The owners and their accountants decided that this was the profitable thing to do.However,soon after they made this decision,both the interest rate and the cost of building the station changed.In which case do these changes both make it less likely that they will now build the station?
A)Interest rates rise and the cost of building the station rises.
B)Interest rates rise and the cost of building the station falls.
C)Interest rates fall and the cost of building the station rises.
D)Interest rates fall and the cost of building the station falls.

Question

Quizplus · Accepted Answer

When interest rates and the cost of building the station both increase, it will be more expensive to finance the project and to construct the station. This will decrease the profitability of the project and make it less likely for Black Oil Company to build the station.

Black Oil Company Considered Building a Service Station in a New