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Benefits of borrowing. Wilson Motors is looking to expand its operations by adding a second manufacturing location. If it is successful, the company will make
Benefits of borrowing. Wilson Motors is looking to expand its operations by adding a second manufacturing location. If it is successful, the company will make $410,000. If it fails, the company will lose $260,000. Wilson Motors is trying to decide whether it should borrow the $260,000 given the current bank loan rate of 14%. Should Wilson Motors borrow the money if a. the probability of success is 88% ? b. the probability of success is 82% ? c. the probability of success is 69% ? a. What is the expected profit (or loss) of the project if the the probability of success is 88%
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