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Many factors play a role in the domino effect when a company is facing credit decisions. Some of these factors are the current and projected interest rates, projected production rates, exports, and monetary exchange rate. With industrial production on the rise in both Germany and the United States, and the economy slowly moving in the direction of the normal state again, the credit market is moving in the right direction as well. Credit decisions are a part of doing business and Larson Inc. is not immune to it. The decision of how much debt should the company incur, how quickly will the company be able to recoup the money, and pay back the debt. Interest rates fell with the struggle of the recession. Because the worst is behind, interest rates are forecasted to rise again within the next five years. In Germany the projected interest rate is 10.5% by 2014 and 7.8% in the United States (EIU data services, 2010).

A second factor to consider when looking at adding additional debt to a company is the monetary exchange rate. According to the EIU data services database (2010), the projection is for the value of the Euro to decrease when compared to the US dollar. The forecast is for the Euro to hit the highest value since 2006 at .733 (LCU:US$ (av)) in 2010 but is looking to be down to .690 by 2014. With Larson Inc operating processing plants in both Germany and the United States, the option is open of incurring debt in either one of the countries. If Larson, Inc would opt to gain the additional credit from the German market then the value of the Euro paying back that debt will not be worth as much as the value of Euro incurring the debt.

The three alternative economic recommendations for Larson, Inc will require upfront funds to incorporate the changes. The most costly will be the research and development (R& D) of breakthroughs and technology for the battery industry. However, Larson, Inc will see the benefits over time. If these breakthroughs can be...