If a company borrows money to finance an investment and the return on the investment turns out to be lower than the cost of borrowing, which of the following statements is true?
A) The shareholders will earn a lower rate of return than if they hadn't borrowed money.
B) The shareholders will earn a higher rate or return than if they hadn't borrowed money.
C) The venture will break even, but not earn a return.
D) The investment will lose more money than if it had not been financed by debt.
Correct Answer:
Verified
Q38: Fort Saskatchewan Ltd.is choosing between paying
Q39: Fort Saskatchewan Ltd.is choosing between paying
Q40: If a company declares a stock
Q41: All of the following statements regarding comprehensive
Q42: Retained earnings would require adjustment for each
Q44: The use of debt to attempt to
Q45: If a company is using leverage successfully,
Q46: What is the right granted to an
Q47: Colborne Co.requires a $500,000 investment on which
Q48: A company has a tax rate
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents