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20 January, 17:03

After another year, Biwei's business is in rapid expansion. He wants to raise $1M new capital. He can finance by taking a loan or issuing stock shares. The market interest rate for a loan is 5%. For an angel investor, injecting $1M into Biwei's business will dilute 50% of Biwei's ownership. What is the capital cost of Biwei's business expansion?

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  1. 20 January, 17:13
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    Answer:The capital cost is $1 million

    Explanation: This is one time expenses on production if goods and services, purchase of land and construction. It is the total cost required to bring a business to a commercially operable status.
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