A New Business Opportunity Has a 70% Chance of Being

question 33

Multiple Choice

A new business opportunity has a 70% chance of being worth $500,000 next year and a 30% chance of being worth $100,000. The appropriate expected rate of return is 10%.
-Refer to the information above. This new opportunity will be financed with a $150,000 loan. What must the promised rate of return on the loan be? Round your answer to the nearest
Hundredth of a percent.

• A)10.00%
• B)13.00%
• C)28.57%
• D)14.29%

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Definitions:

Directly Responsible

Bearing immediate accountability for actions, tasks, or outcomes, without intermediary delegation or oversight.

Profit Maximization

The process of increasing a company's profit to the highest possible level through the adjustment of sales, production, and pricing strategies.

Society's Resources

The assets, both tangible and intangible, that are available for use by the members of a society.

Government Intervention

Actions taken by a government to influence or directly regulate economic, social, or other activities within a country.