Should Mr. Cruz maximize the amount of debt or equity used in this project? Why?

Mr. Cruz should maximize the amount of debt for this project. Based on the ROI calculations, it is evident that Mr. Cruz will receive a higher return if he utilizes debt to fund the additional $210,000 needed to purchase and renovate the restaurant. Also, debt is almost always less than the cost of equity because equity investors require a higher return, as they are exposed to a greater risk than lenders.