You have an investment opportunity available to you that requires $400,000. You have no funds available but you will have income of $120,000 this year. The investment will have a net payoff of $33,000 at the end of the year. If the market rate is 7.5%, will you make the investment?
Question 6
Select one:
A. No, because I only get $33,000 back on my $400,000.
B. Yes, because I will get $3,000 above my required return.
C. No, because I need $280,000 more than I will have.
D. Yes, because the market rate is less than the borrowing rate.