INVESTMENT

How do the following institutions obtain the money to pay for the necessary work?

a) A town council which decides that it has to provide housing for 2000 families.

b) A government of a new territory which needs to build main roads throughout the territory.

c) An industry which finds that it has to renew all its machine tools if it is to remain competitive.

d) A commercial enterprise which needs to set up three new factories, properly to satisfy the demand for its goods.

If there is not sufficient money available from taxes or profits, the project must be abandoned or the money borrowed. People lend money to institutions if, in return, they get back a little more than they lend. When an individual lends money to an institution in the hope of making a profit, he is said to be making an ' investment'. The extra amount that is obtained is called the ''interest'' on the investment and it is usually measured as a certain percentage of the investment, paid annually.

(The process of lending money to an institution is usually carried out by buying stock or shares issued by the government or company. These can be sold back if you wish to withdraw your loan.)

It is possible to invest in other ways than those described, for example, by buying insurance policies.

<== попередня сторінка	\|	наступна сторінка ==>
Choice of installation	\|	The value of money

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