The Next Questions Refer to the Following

question 7

Multiple Choice

The next questions refer to the following.
A publicly traded firm has 4 million shares of stock outstanding, with a current share price of $50. The value of its plant and equipment is $250 million. Its profit annually is $50 million.
-The average rate of return on existing capital is

• A) 5%
• B) 10%
• C) 15%
• D) 20%
• E) 25%

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Definitions:

Warranties

Guarantees issued by a manufacturer or seller to a buyer, promising to repair or replace a product if it fails within a certain period of time.

Education

The systematic process of facilitating learning, or the acquisition of knowledge, skills, values, beliefs, and habits through various methods such as teaching, training, storytelling, discussion, and research.

Extracurricular Activities

Activities that fall outside the scope of the regular academic curriculum but are still considered important for overall education.

Adverse Selection

A situation in insurance and finance where parties at risk are more likely to participate in a contract, leading to a higher than average risk for the insurer or lender.