Suppose an investment project is projected to provide $200,000 in revenues. The investment will cost the company $180,000. Given this information, one should commit to the project:

Question

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The net gain from the project is $20,000. To determine if the project is worthwhile, compare this gain to the cost of borrowing $180,000. If the interest rate is less than or equal to 11%, the cost of borrowing will not exceed $20,000, making the project profitable.

Suppose an Investment Project Is Projected to Provide $200,000 in Revenues