Factor Influencing Investment 1. Rate of Interest Interest is the financial cost that a firm must pay to borrow the money capital required to purchase the real capital. The opportunity cost of capital to firm is the interest rate. The lower the interestrate, the greater the number of investments. When the interest rate is lower, cost of borrroing will also reduce ad the number of investment projcct will increase. There is an inverse relationship between rate of interest and investment. For example, Company ASWIN needs to borrow money from Maybank to buy machinery for its company. Company ASWIN must pay an interest rate 8% for the amount of money it borrowed