A tech company can make a 3% real return on an investment. It can borrow funds to finance the investment at a nominal rate of 6%, and the inflation rate is 1%. Hence:
A. The company should borrow at a nominal rate of 3%.
B. The company's real return on investment is 9%.
C. The inflation-adjusted return is 2%.
D. The company should not make the investment.

Q&A Education