Final answer:
The firm should consider investing if the 6% rate of return meets or exceeds its required rate of return. Without knowledge of the firm's actual cost of capital or alternative investments, we cannot conclude definitively. However, the investment is beneficial if it exceeds the 4.5% rate required for credit decisions.
Step-by-step explanation:
The question deals with a business decision regarding whether a firm should invest its available cash in a project that offers a 6% rate of return, or avoid investment due to an 8% interest rate that would be applicable if borrowing was necessary. In this scenario, the firm does not need to borrow as they have the cash on hand, thus, the comparison is between earning a 6% return on investment versus the opportunity cost of not investing the cash elsewhere.
To determine if the investment is worth pursuing, we compare the investment's rate of return to the firm's required rate of return (or the cost of capital). Since the firm is not borrowing, the 8% interest for a loan is not relevant. Therefore, if the 6% return meets or exceeds the firm's required rate of return, the investment would be considered beneficial. If it is lower than the firm's required rate of return, the firm would be better off investing the money elsewhere or keeping it in reserve.
Since the required information like the firm's actual cost of capital or alternative investment options is not provided, we cannot definitively conclude whether the firm should make the investment. However, if the only consideration was the provided 4.5% rate required for credit policy decisions, then the investment yielding 6% would be acceptable as it exceeds the 4.5% requirement.