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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