Carmon Company invested $300,000 in the equity securities of Mann Corporation. The current market value of Carmon’s investment in Mann is $250,000. Carmon currently needs funds for operating purposes. Although interest rates are high, Carmon’s president has decided to borrow the needed funds instead of selling the investment in Mann. He explains that his company cannot afford to take a $50,000 loss on the Mann stock. Evaluate the president’s decision based on this information.
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