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Z Corp needs to raise $7 million in order to build a new factory to expand production. The company must decide what is the cheapest
Z Corp needs to raise $7 million in order to build a new factory to expand production. The company must decide what is the cheapest alternative to raise the money. They can choose to use retained earnings or borrow the money. If they borrow it, they will have to pay a total of $7.19 million in 1 year (including interest expenses). The cost of capital is 8%. At present, which of these two alternatives to raise the $7 million is cheaper? A. Using retained earnings B. Not enough Information O C. Borrowing the money
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