What Is the Proportion of Debt Financing for a Firm

question 16

Multiple Choice

What is the proportion of debt financing for a firm that expects a 24% return on equity,a 16% return on assets,and a 12% return on debt? Ignore taxes.

• A) 54.0%
• B) 60.0%
• C) 66.7%
• D) 75.0%

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Definitions:

Tranquilizers

Medications that are used to reduce tension and anxiety.

Sedatives

Substances or drugs that reduce excitement, irritability, or nervousness by inducing a calming effect on the central nervous system.

Opiates

A group of drugs derived from opium, used for pain relief, and can also induce sleep or euphoria.

Psychoactive Drugs

Drugs that act on the nervous system to alter consciousness, modify perception, and change moods.