What Is the Expected Rate of Return to Equityholders If

question 112

Multiple Choice

What is the expected rate of return to equityholders if the firm has a 35% tax rate,a 10% rate of interest paid on debt,a 15% WACC,and a 60% debt-asset ratio?

• A) 12.50%
• B) 21.25%
• C) 22.50%
• D) 27.75%

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Definitions:

Revenue Enhancement

Revenue enhancement refers to strategies and actions taken by a company to increase the income it generates from its business activities.

Acquisitions

The process of a company purchasing the majority or all of another company's shares to gain control of that company.

Poison Pill Defense

A tactic employed by corporations to fend off unwanted takeovers by decreasing their appeal to would-be acquirers.

Share Price

The cost of a single share of a company's stock.