The Influence Study of Investment Optimization Timing Toward Debt Financing Under Interest Rate Uncertainty by Data Probability Analysis

For small companies, it is hard for them to get financing from the banks as there are many restrictions on the bank market, only by negotiating and bargaining with banks can they get financing. If the company can no longer expect to pay out the amount of debt, then the bank can immediately carry out the loan contract to clear all the financial accounts of the company, if so the company must be announced bankrupt. While in perfectly competition market, if occurs a breach will lead to the increase of the debt levels and interest, then easy to get investment. And company's investment also exist uncertainty due to the volatility of the interest rates, on the other hand this will increase the execution value of investment plans. In conclusion, liabilities for the choice of investment opportunity is depended on the debt market structure, and the probability of default once increasing, the capital cost is also subsequently increasing.