Company A has an annual income of $100 million and net profit is %20 , and...

Company A has an annual income of $100 million and net profit is %20 , and the owner wants to establish a project at a cost of $300 million. Is the project should financed from the income of Company A or financed from bank, and why?

Expert Solution

The company should finance the project from Bank

The Company has net profit of 20% which is $20 Millions and they want to finance the project of $300 millions, So, it is clear that the company doen't have enough income to finance this internally, Therefore, they can raise the money though bank and pay interest and principal amount from their net income.

jeff jeffy answered 2 years ago

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