A Firm Requires an Investment of $18,000 and Will Return

question 20

Multiple Choice

A firm requires an investment of $18,000 and will return $25,000 after one year. If the firm borrows $10,000 at 6%, what is the return on levered equity?

• A) 80%
• B) 64%
• C) 96%
• D) 112%

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Definitions:

Permeability

A measure of how easily fluids can pass through a porous rock or sediment.

Water Table

The level below the Earth's surface at which the ground is fully saturated with water.

Zone of Saturation

The area beneath the Earth's surface where all the pores and fractures of the rock are filled with water.

Permeability

A measure of how easily fluids can flow through a porous material, such as rocks or soil, due to the presence of interconnected void spaces.