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Suppose you own a small real estate business and want to expand your business profile. On discussing this idea with your financial advisor, he suggests
Suppose you own a small real estate business and want to expand your business profile. On discussing this idea with your financial advisor, he suggests the following options: A logistics business requiring an investment of 20,00,000, with an internal rate of return of 18% A bottling plant requiring an investment of 5,00,000, with an internal rate of return of 10% A construction project requiring an investment of 75,00,000, with an internal rate of return of 22% To invest in any of the above-mentioned businesses, you would need to borrow money on credit, for which you have the following options: From the bank at an interest rate of 12%, with a credit limit of 10,00,000 From an NBFC at an interest rate of 15%, with a credit limit of 50,00,000 From micro-financing companies at an interest rate of 24%, with a credit limit of 1,00,00,000 Which investment option will you choose considering that you can finance a project from a single source only
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