Why it’s optimal to utilize leveraged money for business expansion

Because leverage lets you own the upside of more assets than you could buy with cash alone, while the downside is capped at the equity you put in.
In one sentence: you control 100 % of the growth on someone else’s dime.

Key math:

• Cash deal: $100 k equity buys $100 k asset → 10 % growth = $10 k gain → 10 % ROE.
• Leveraged deal: $20 k equity + $80 k loan buys $100 k asset → 10 % growth = $10 k gain, minus $4 k interest (5 %) = $6 k net → 30 % ROE on the same $20 k.

Extra kicker: the interest is tax-deductible, so the after-cost spread is even wider.
As long as the asset’s cash yield > after-tax cost of debt, every borrowed dollar is like a free employee who sends you the surplus.