Return on Equity Increases When the Expected Rate of Return

question 227

True/False

Return on equity increases when the expected rate of return from the acquired assets is higher than the interest rate on the debt issued to finance the acquired assets.

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Definitions:

CCA Class

Capital Cost Allowance Class, a Canadian tax classification system for categories of depreciable property.

Book Value

is the net value of a company's assets found on its balance sheet, subtracting liabilities from the total value of assets.

Resell

The act of selling something that one has purchased to another buyer, often for a price higher than the original purchase price.

Equipment Cost

Equipment cost refers to the purchase price and associated expenses of acquiring equipment for business operations, including delivery and installation fees.