Assume That Your Firm Has a Potential Investment Project Which

question 54

Multiple Choice

Assume that your firm has a potential investment project which generates a return of 15% and has a cost of $200,000. Assume further that your firm has $200,000 of retained earnings and that the market interest rate is 10%. In this case, your firm should

• A) loan the retained earnings out at 5%.
• B) loan the retained earnings out at 10%.
• C) loan the retained earnings out at 15%.
• D) invest the $200,000 of retained earnings in the project.

---

Definitions:

Right-of-Way

The legal right, established by usage or grant, to pass along a specific route through grounds or property belonging to another.

Positive Covenant

A clause in a contract that requires a party to take a specific action or comply with certain conditions.

Cedar Trees

A species of evergreen coniferous trees known for their durable, fragrant wood and various species around the world.

Joint Tenants

A form of co-ownership where individuals share equal ownership of property and have the right of survivorship.