Which One of These Statements Correctly Applies to an Unlevered

question 7

Multiple Choice

Which one of these statements correctly applies to an unlevered firm that pays no taxes?

• A) The return on equity exceeds the WACC.
• B) The return on assets equals the return on equity and also equals WACC.
• C) The return on assets equals the return on equity and exceeds WACC.
• D) The return on equity equals WACC and exceeds the return on assets.

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