If investors have invested $25,000 of common equity in a company and it is determined that the required earnings of the company are $2,250 each period,then investors must expect to earn what return?
A) the risk free rate
B) 9%
C) 11%
D) the market premium

Question

Quizplus · Accepted Answer

The expected return is calculated by dividing the required earnings ($2,250) by the invested equity ($25,000), which equals 9%.

If Investors Have Invested $25,000 of Common Equity in a Company