A business will be likely to borrow to fund projects if the: a. project will produce a good or service that is in high demand. b. rate of return on the project is less than the interest rate on the loan. c. minimum efficient scale will be attained. d. rate of return on the project is at least as high as the interest rate on the loan.

Question

Hadassah Reeves

Business

2 December, 03:59

A business will be likely to borrow to fund projects if the: a. project will produce a good or service that is in high demand. b. rate of return on the project is less than the interest rate on the loan. c. minimum efficient scale will be attained. d. rate of return on the project is at least as high as the interest rate on the loan.

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Answers (1)

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Deegan Costa · Answer 1

d. rate of return on the project is at least as high as the interest rate on the loan.

Explanation:

The business will only start those projects which can meet the return requirement of those stake holders who has provided funds to finance that project. When the funds are raised through loan to finance the particular project, then that particular project shall give the return, which shall be at least equal to the interest rate charged by the borrowers

So based on the above discussion, the answer shall be d. rate of return on the project is at least as high as the interest rate on the loan.