Your Sister Is Thinking About Starting a New Business

question 45

Multiple Choice

Your sister is thinking about starting a new business.The company would require $375,000 of assets,and it would be financed entirely with common stock.She will go forward only if she thinks the firm can provide a 13.5% return on the invested capital,which means that the firm must have an ROE of 13.5%.How much net income must be expected to warrant starting the business?

• A)$41,234
• B)$43,405
• C)$45,689
• D)$48,094
• E)$50,625

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Definitions:

Affidavit

A written statement confirmed by oath or affirmation, used as evidence in court.

Affirmative Defense

A defense in which the defendant introduces evidence, which, if found to be true, will negate a plaintiff's claim, even if the allegations are true.

Memorandum of Law

A detailed written statement prepared by legal counsel, arguing a specific legal issue or point, often submitted in support of motions or during trial preparations.

Brief

A written document submitted by counsel arguing a case, outlining the facts, legal issues, and arguments for consideration by the court.