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Ian

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1

How would a bank loan affect the economics of the cellar?

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Book a coaching with Ian

100% Recommendation Rate

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This doesn't matter! This isn't in the prompt/question.

The interviewer, clearly a Partner (joke), has the $ to build the cellar.

Regardless, the rate at which he/she could obtain the loan is technically the same rate at which he/she could loan out their money.

Therefore, in both situations, your hurdle rate is the opportunity cost (if asked, which it wasn't). Of course, you could probably recommend "Yes, you can do this, but it'd be better to invest it and use THOSE returns to fund your wine"

This doesn't matter! This isn't in the prompt/question.

The interviewer, clearly a Partner (joke), has the $ to build the cellar.

Regardless, the rate at which he/she could obtain the loan is technically the same rate at which he/she could loan out their money.

Therefore, in both situations, your hurdle rate is the opportunity cost (if asked, which it wasn't). Of course, you could probably recommend "Yes, you can do this, but it'd be better to invest it and use THOSE returns to fund your wine"