A Firm Requires an Investment of $20 000 and Will

question 48

Multiple Choice

A firm requires an investment of $20 000 and will return $25 000 after one year. If the firm borrows $10 000 at 7%, what is the return on levered equity?

• A)43%
• B)39%
• C)29%
• D)37%

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Definitions:

Synergistic Effect

The combined effect of two or more variables that exceeds the sum of their individual effects.

Alcohol

A psychoactive substance commonly found in beverages like beer, wine, and spirits, which can have intoxicating effects.

Esophageal

Pertaining to the esophagus, which is the muscular tube that connects the throat (pharynx) with the stomach.

Endometrial

Pertaining to or involving the endometrium, which is the mucous membrane lining the uterus.