If a Firm Earns 10% Return on Funds They Borrowed

question 192

True/False

If a firm earns 10% return on funds they borrowed at 15% interest, the owners of the firm realize a benefit from using leverage.

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Definitions:

Propositions

Statements or assertions put forward in debate or argument, characterized by their ability to be true or false.

Explanandum

The phenomenon or event that is explained by a scientific theory or investigation.

Hypothesis

A proposed explanation made on the basis of limited evidence as a starting point for further investigation.

Proposition

A declaration or pronouncement that indicates an evaluation or stance, subject to being correct or incorrect.