A Firm Requires an Investment of $30,000 and Will Return

question 86

Multiple Choice

A firm requires an investment of $30,000 and will return $35,000 after 1 year.If the firm borrows $20,000 at 10% what is the return on levered equity?

• A)43%
• B)30%
• C)37%
• D)39%

---

Definitions:

Economic Growth

An increase in the amount of goods and services produced per head of the population over a period of time.

Fed Attention

The focus or monitoring by the Federal Reserve, the U.S. central bank, on various economic indicators and conditions to make monetary policy decisions.

Rational Expectations

A theory in economics that suggests individuals make predictions about the future based on all available information, incorporating their understanding of economic policies and trends.

Monetary Policy

Actions of a central bank, currency board, or other regulatory committees that determine the size and rate of growth of the money supply, which in turn affects interest rates.