Happy Covers was started by Lucy in 2017. The business hires out chair covers and ribbons for weddings, school proms and other events.
In Lucy’s second year of trading the interest rate increased from 1.5% to 3%.
Identify ONE possible effect of this change in the interest rate on Lucy’s business?
Select ONE answer:
- Worsening cash-flow from higher customer bankruptcies
- Greater competition from rivals
- Increased variable costs
- Reduced fixed costs
Show the workings to arrive at your answer, and explain and justify your reasons:
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This multiple-choice question is suitable for Business Studies KS4 & KS3 classes
The answer is 1
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