Calculate the Firm's Expected Return on Its Assets If Its

question 106

Multiple Choice

Calculate the firm's expected return on its assets if its expected return on debt is 10%,its expected return on equity is 20%,and the company cost of capital is 14%.

• A) 14%
• B) 15%
• C) 16%
• D) 17%

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Definitions:

Market Price Per Share

The current price at which a share of a company's stock can be bought or sold.

Net Working Capital Turnover

A ratio that measures how effectively a company utilizes its net working capital to support sales.

Return on Equity

A financial ratio that measures the profitability of a company in relation to the shareholder's equity.

Profit Margin

A financial metric that measures the extent to which a company or a business activity makes money, expressed as a percentage of sales revenues.