Cleveland Megatron,Inc.is short on cash and finds itself in a "net borrowed position." It has $2 million of its $5 million credit line available at present,however.If the annualized cost of credit line borrowing is lesser than the annualized cash discount rate,the NPV-maximizing decision is to

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Borrowing the necessary funds to take advantage of the cash discount is the NPV-maximizing decision when the annualized cost of credit line borrowing is less than the annualized cash discount rate. This is because the savings from the cash discount exceed the cost of borrowing.