Jetblue Case Study

Based on JetBlue’s growth rate over the last two years, the business financial forecast seems reasonable. Their fleet of aircrafts will increase by approximate 14 planes and increasing their revenue by $290 million, on average. One of the key assumptions in the financial forecast is percentage of taxes paid each year beginning in 2001. The tax rate remained constant at 34% year over year. Since the statement is an outline of the financial forecast, the tax rate is subject to change. Lower interest rates have proven to be good to consumers but not so good for investors. A 30-year mortgage can be purchased for less than 4% and according to financial analyst, rates may not increase much, if at all, during 2016. Lower interest rates could mean more consumer spending, such as, a larger mortgage, the purchase of a new car, travel, and other luxuries. These factors contribute to economic growth and higher demand. On the flip side, what does a lower interest rate mean for investors? The institutions that lend money may make less income from their loans. A lower interest rates cause bond prices to increase and become more attractive. There are advantages and disadvantages to everything including lower interest rates. Although investors may not see their stock options grow by 50%, lower interest rates will cause increase spending and that’s a benefit for consumers and investors. The Consumer Price Index (CPI) is defined as a measurement of the delta in price paid by urban consumers of goods and services and is thought to be the most serious when measuring inflation. When CPI is outperforming, it can be considered inflationary and may increase interest rates and yields. Adversely, low CPI performance may cause interest rates and yields to decrease (Mortgage-X, 2016).

The indicators mentioned above are great tools to determine how interest rates will move from month to month. According to Market Realist. Com, the likelihood of interest rates increasing in March is close to 2% based on Federal funds