A new business opportunity has a 70% chance of being worth $500,000 next year and a 30% chance of being worth $100,000. The appropriate expected rate of return is 10%.
-Refer to the information above. The new opportunity will be financed with a $150,000 bank loan. What rate of return will the levered equity holder earn if the business pays off only
$100,000? Round your answer to the nearest tenth of a percent.
A)-100.0%
B)-48.8%
C)-55.2%
D)This cannot be determined without knowing how much equity was invested in the business.

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The Answer of A new business opportunity has a 70% chance of being worth $500,000 next year and a 30% chance of being worth $100,000. The appropriate expected rate of return is 10%.
-Refer to the information above. The new opportunity will be financed with a $150,000 bank loan. What rate of return will the levered equity holder earn if the business pays off only
$100,000? Round your answer to the nearest tenth of a percent.
A)-100.0%
B)-48.8%
C)-55.2%
D)This cannot be determined without knowing how much equity was invested in the business.

A New Business Opportunity Has a 70% Chance of Being