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Is the incremental cost of borrowing additional funds affected significantly by the early repayment of the loan?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 11QTD

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What is meant by the incremental cost of borrowing additional funds?
How will a decrease in time preferences affect the loanable funds market? A. There will be an increase in the supply of loanable funds. B. There will be a decrease in the supply of loanable funds. C. There will be an increase in the demand of loanable funds. D. There will be a decrease in the demand of loanable funds.
Is it okay to solve the payback period using the initial investment divided by the after-tax cashflow?
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