Most Businesses Will Acquire New Assets If _______

question 92

Multiple Choice

Most businesses will acquire new assets if _______.

• A)the rate of return generated by those assets is lower than the after-tax marginal cost of debt financing associated with acquiring additional assets
• B)the rate of return generated by those assets exceeds the after-tax marginal cost of debt financing associated with acquiring additional assets
• C)they have surplus amounts of cash which they need to spend
• D)their stockholders vote to do so

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Definitions:

Simple Interest

Interest determined purely on the original amount borrowed, or on the unpaid portion of that initial amount.

Special Account

An account designated for a particular purpose or offering special conditions or privileges.

Compounded Monthly

A method of calculating interest where the interest earned each month is added to the principal, so the investment grows at an increasing rate.

Compounded Annually

A method of calculating interest in which the accumulated interest is added to the principal at the end of each year, with future interest then calculated on the new total.