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Investment Opportunities

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A company has the following investment opportunities for which the accompanying expected rate of return has been estimated.

Project Expected Rate of Return

A 12%
B 9.5%
C 8%
D 5%

If the cost of borrowing the money to finance investment is 6%, which of the products will be accepted?

If the cost of borrowing increases to 10%, which of the projects will be accepted?

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Solution Summary

The solution explains how to choose from various investment opportunities.

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If the cost of borrowing the money to finance investment is 6%, which of the products will be accepted?

The projects to be accepted would be such that they given a return greater than 6%. If the return is less than 6%, ...

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