Potential expansion in cebu

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The total net profit after tax of Company B is 100 Million. The dividends are to be distributed one month from now. During the board meeting, the management identified a potential expansion in Cebu which amounted to 100 million. Director T said that the expansion must be financed thru bank loans which only cost 3% interest (fixed until full payment of the loan). Director U said that the best way to finance the project is thru retained earnings. What if the prevailing interest rate in the market is 8%, and the Central Bank announced that this will persist for the next 5 years, is it okay to retain the earnings? Begin your answer with Yes or No, then your reasons.

Reference no: EM132903717

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