Equity in a Firm with Debt Is Called

question 12

Multiple Choice

Equity in a firm with debt is called:

• A)levered equity.
• B)riskless equity.
• C)unlevered equity.
• D)risky equity.

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Definitions:

Cash Inflows

The total amount of money being transferred into a business, typically measured over a specific period of time.

Cost of Capital

The compulsory return rate businesses need on investment plans to sustain their market position and attract monetary contributions.

NPV

Net Present Value, a calculation used to determine the present value of an investment's expected future cash flows compared to its initial cost.

Internal Rate

Refers to the internal rate of return (IRR), a financial metric used to estimate the profitability of potential investments.