A Newly Appointed CFO of a Company Tells You That

question 63

Multiple Choice

A newly appointed CFO of a company tells you that he needs to determine the required return on unlevered equity should his firm completely deliver.He further tells you that the required return on assets is 10% and that his cost of debt is 3% based upon a current borrowed amount of $50,000,000 but he doesn't know the market value of his equity.What is the required return on equity should his firm eliminate all of its debt?

• A) 10.0%
• B) 11.5%
• C) 13.0%
• D) it is impossible to tell

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Definitions:

Roles And Expectations

Refer to the specific duties, responsibilities, and anticipated outcomes associated with a position or job description.

Transaction Selling

A sales approach focused on completing individual sales or transactions without necessarily building long-term customer relationships.

Customer Satisfaction

Customer satisfaction is a measure of how well a product or service meets or exceeds the expectations of the customer.

Relationship Selling

A sales approach focusing on building long-term relationships with customers rather than on one-time transactions.