What Is the Proportion of Debt Financing for a Firm

question 99

Multiple Choice

What is the proportion of debt financing for a firm that expects a 35% return on equity, a 20% return on assets, and a 15% return on debt? Ignore taxes.

• A)15%
• B)25%
• C)75%
• D)80%

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Definitions:

Annual Growth Rate

The annual growth rate measures the percentage increase in the value of a particular variable (such as revenue, profit, or investment) over a one-year period, indicating the pace of growth.

Eating Establishments

Refers to businesses that serve food and beverages for consumption by customers on-premises or through take-away and delivery services.

Population

The total number of individuals or entities within a specified area or group.

Compounded Annually

The method of gaining interest on the original principal as well as on the interest accrued from prior periods, computed annually.