The shareholders of Innovative Technologies Ltd (ITL)have invested a total of $3 million and require a return of 15 per cent.The debtholders of ITL have invested $20 million and charge an interest rate of 9 per cent.Which of the following is the total return required by the company's capital providers?

Question

Quizplus · Accepted Answer

The total return required by the company's capital providers can be calculated as follows:

Shareholders' required return = $3 million x 15% = $450,000
Debtholders' interest expense = $20 million x 9% = $1,800,000

Total return required = $450,000 + $1,800,000 = $2,250,000

Therefore, the correct answer is D.

The Shareholders of Innovative Technologies Ltd (ITL)have Invested a Total