Assume a Firm Is Financed with 60% Debt on Which

question 85

Multiple Choice

Assume a firm is financed with 60% debt on which it pays interest of 7%.What is the expected return on equity if the expected return on assets is 12%? Ignore taxes.

• A) 16.14%
• B) 20.30%
• C) 19.50%
• D) 21.67%

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Definitions:

Part Learning

The process of acquiring knowledge or skills in segments or portions, as opposed to learning an entire body of knowledge at once.

Competency Assessment

Analysis of the sets of skills and knowledge needed for decision-oriented and knowledge-intensive jobs

Skills And Knowledge

The abilities and understanding that individuals posses, which can be developed through education, training, or experience.

Knowledge-intensive Jobs

Positions that primarily depend on the use of information and expertise rather than manual labor.