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Assume you want to invest a project. You have no cash, so you can borrow money from the bank, and the interest rate is 10%.
- Assume you want to invest a project. You have no cash, so you can borrow money from the bank, and the interest rate is 10%. There are two options:
Option 1: Invest a restaurant with $1 million, and you will get $80k return per year.
Option 2: Invest a beauty parlor with $1 million, and you will get $50k return per year. Since the government is going to support the investment on developing beauty parlor, you can also borrow money from the government with a low interest rate of 2%.
Please explain which option is better and why.
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