The Return on Investment (ROI) of a company ranges between 10-12% for the past three years....
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The Return on Investment (ROI) of a company ranges between 10-12% for the past three years. To finance its future fixed capital needs, it has the following options for borrowing debt: Option 'A': Rate of interest 9% Option 'B': Rate of interest 13% Which source of debt, 'Option A' or 'Option B', is better? Give reason in support of your answer. Also state the concept being used in taking the decision. The Return on Investment (ROI) of a company ranges between 10-12% for the past three years. To finance its future fixed capital needs, it has the following options for borrowing debt: Option 'A': Rate of interest 9% Option 'B': Rate of interest 13% Which source of debt, 'Option A' or 'Option B', is better? Give reason in support of your answer. Also state the concept being used in taking the decision.
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The general principle of borrowing at an interest rate is lower the interest rate les... View the full answer
Related Book For
Federal Taxation 2016 Comprehensive
ISBN: 9780134104379
29th edition
Authors: Thomas R. Pope, Timothy J. Rupert, Kenneth E. Anderson
Posted Date:
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