Assume Paul owns a $1 million investment that pays him a variable LIBOR-based interest rate equal to LIBOR + 1% each quarter. Since his earnings are subject to LIBOR values and are variable in nature, he wants to switch to fixed-rate interest payments. While new currency rates have been added, many have been removed or… Read More

You can use accounting profit to look at your business’s financial performance and see how profitable your business is. Capital is made up of long-term liabilities and the equity account of the business. To calculate opportunity cost, you multiply the interest rate against long-term debt and add that to the required return of equity investors…. Read More