question archive An Indian firm finds that by investing in a project is East Africa, its borrowing capacity will go up by Rs
An Indian firm finds that by investing in a project is East Africa, its borrowing capacity will go up by Rs
Subject:FinancePrice: Bought3
An Indian firm finds that by investing in a project is East Africa, its borrowing capacity will go up by
Rs.50 million. If the firm's borrowing rate in India is 15% and the risk-free rate of interest is 6%, what
is the net benefit owing to the increased borrowing capacity? (Assume that the tax rate applicable is
30% in India and the life of the project is 5 years.)
