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has been proposed that a company invest $ 1 million in a venture which will yield a gross income of Sl million per year. The

has been proposed that a company invest $1 million in a venture which will yield a gross income of Sl million per year. The total annual costs will be $800,000 per year including interest on the total investment at an annual rate of 8 percent. In an alternate proposal, the company can invest a total of $600,000 and receive annual net earnings (before income taxes) of $220,000 from the venture. In this case, the net earnings were determined on the basis of no interest costs. The company has$1 million of its own which it wishes to invest, and it can always obtain an effective percent annual interest rate by loaning out the money. What would be the most profitable way for the company to invest Its $ 1 million

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