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Please answer and include why and at what rate. 5. As a small business owner you have decided to expand your operation. This expansion will
Please answer and include why and at what rate.
5. As a small business owner you have decided to expand your operation. This expansion will require a rather large initial investment, and you are considering whether to finance this investment completely from the business's cash reserves or to partially finance the investment using a loan from a local bank. Using the information provided below, discuss which option (financing with cash, or using the loan) would result in the larger NPV for the project. Briefly explain and justify your answer. Discount rate Loan interest rate Marginal tax rate 10% 10% 30% Step by Step Solution
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