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Irving owns a chain of movie theaters. He is considering whether he should build a new theater downtown. The expected rate of return is 15 percent per year. He can borrow money at a 12 percent interest rate to finance the project. Should Irving proceed with this project?

Respuesta :

estryzy

Answer:

Yes, Irvin should proceed with this project.

Explanation:

It will profit Irvin to proceed with this project because loans are only for a short while but his investment will outlive the loan. Asides that, the major reason why Irvin must proceed with this project is simply because the expected rate of returns from building the new theater exceeds the interest rate of borrowing.

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