A firm requires an investment of $20,000 and will return $26,500 after one year. If the firm borrows $6000 at 7%, what is the return on levered equity?
A) 35%
B) 52%
C) 43%
D) 61%

Question

Quizplus · Accepted Answer

C) The firm will owe debt holders the amount borrowed times (1+rate) after one year. 11ea84dc_f506_b3b1_9a63_ed76ff7bd4d4_TB1316_00_TB1316_00 11ea84dc_f506_dac2_9a63_0f106fa7ea00_TB1316_00_TB1316_00 11ea84dc_f506_dac3_9a63_3138ba95b0e1_TB1316_00_TB1316_00 11ea84dc_f506_dac4_9a63_d5b360152025_TB1316_00_TB1316_00

A Firm Requires an Investment of $20,000 and Will Return