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Benefits of Borrowing. Wilson Motors is looking to expand its operations by adding a second manufacturing location. If successful, the company will make $450,000; if it fails, the company will lose $250,000. Wilson Motors is trying to decide if it should borrow the $250,000 given the current bank loan rate of 15%. Should Wilson Motors borrow the money if

(a) the probability of success is 90%?

(b) the probability of success is 80%?

(c) the probability of success is 70%?

Basic Finance, Finance

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