What Is the Proportion of Equity Financing for a Firm

question 60

Multiple Choice

What is the proportion of equity financing for a firm that expects a 15% return on equity, a 10% return on assets, and an 8% return on debt? Ignore taxes.

• A)25%
• B)29%
• C)75%
• D)71%

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Definitions:

Predicted Outcome

A predicted outcome is the expected result of an experiment or model, often based on theoretical insight or previous data.

Hasty Generalization

A fallacy in which a conclusion is not logically justified by sufficient or unbiased evidence.

Composition

The act of combining parts or elements to form a whole; in logic, the fallacy of assuming that what is true of the part is true for the whole.

Fallacy Of Division

The erroneous reasoning that what is true of the whole must also be true of its parts.