An Investor Is Considering Starting a New Business

question 41

Multiple Choice

An investor is considering starting a new business.The company would require $475,000 of assets, and it would be financed entirely with common stock.The investor 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) $52,230
• B) $54,979
• C) $57,873
• D) $60,919
• E) $64,125

Analyze the practices of steering, redlining, and other discriminatory actions in the real estate market.

Comprehend theories related to spatial assimilation and ethnic enclaves.

Examine the extent and effects of neighborhood segregation among different racial and ethnic groups.

Understand the phenomena of white flight and its consequences for urban and suburban dynamics.

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Definitions:

Bonds

Securities issued by corporations or governments that represent a loan from the investor to the issuer, typically paying periodic interest payments and returning the principal at maturity.

Maturation

The process of becoming mature, either physically, emotionally, or in the case of products and ideas, reaching a state of full development.

Yield to Maturity

The total return expected on a bond if it is held until its maturity date.

Bonds

Fixed-income investments where an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period at a variable or fixed interest rate.