Final answer:
Factors that affect a company's desired ROI include expectations of future profits and interest rates. Other factors such as energy prices, government incentives, and taxes can also have an impact.
Step-by-step explanation:
The following factors influence a company's intended ROI:
- Expectations of future profits: When an economy is expected to grow, businesses perceive a growing market for their products, leading to higher business confidence and more investment.
- Interest rates: Lower interest rates encourage investment, whereas higher interest rates discourage it. The cost of investment includes the interest rate, which measures the opportunity cost of purchasing business capital.
Additionally, factors such as energy prices, government incentives for investment, and changes in taxes can also impact a company's desired ROI.