As a small business owner, you have decided to expand your operation. This expansion will require a rather large initial investment, and you are considering whether to finance this investment completely from the business's cash reserves or partially finance it with loan funds from a local bank.
Using the information below, briefly discuss which option (financing with cash or using the loan) would result in the larger NPV for the project. Include a short explanation/justification for your answer.
Discount Rate: 10%
Loan Interest Rate: 10%
Marginal Tax Rate: 30%