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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 $460,000. If it fails, the company will lose $250,000. Wilson Motors is trying to decide whether it should borrow the $250,000 given the current bank loan rate of 13%. Should Wilson Motors borrow the money if a. the probability of success is 92%? b. the probability of success is 83%? 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 92%? $ (Round to the nearest dollar. Enter a negative number for a loss.)
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