Which of the Following Situations Represents a Successful Use of Financial

question 148

Multiple Choice

Which of the following situations represents a successful use of financial leverage?

• A) A firm issues new shares of stock and uses the proceeds from the sale to retire its outstanding debt.
• B) A firm borrows money at 8% and earns an 11% return on its investment of these funds.
• C) A firm attracts the interest of two venture capitalists and plays one against the other to gain the best deal.
• D) A retail firm purchases merchandise at $10 and sells it for $15.

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Definitions:

Dishwashers

Appliances designed for automatically cleaning dishes, cutlery, and other utensils, significantly reducing manual labor in kitchens.

Manufacturing Cost

The total expense related to the production of goods, including labor, materials, and overhead costs.

Metal Price

The cost of purchasing a specific type of metal on the market, influenced by factors such as supply, demand, and geopolitical events.