Marginal investment
One speaks of a marginal investment when the profit to be expected from the investment is just the same or just above the return on a safe financial investment. As a rule, the current market interest rate is used as the basis for the calculation . An investment with a lower return than the market interest rate can therefore be described as unprofitable.
Investments below this limit are still often made by companies. Reasons for this can include a. be:
- Synergy effects (e.g. independence from suppliers)
- Completion of the range
- Avoidance of downsizing