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

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Definitions:

Persuasive Message

Communication intended to influence the attitudes, beliefs, or actions of others through reasoning and appeal.

Important Considerations

Critical factors or elements that must be taken into account in decision-making or planning processes.

AIDA

A marketing model that outlines the consumer journey through Attention, Interest, Desire, and Action, used to guide advertising and sales strategies.

Benefit

An advantage or profit gained from something or an outcome that provides well-being or assistance.