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Assume a Firm Is Financed with 30% Debt on Which

Question 2

Multiple Choice

Assume a firm is financed with 30% debt on which it pays interest of 9%.What is the expected return on equity if the expected return on assets is 14%? Ignore taxes.


A) 16.14%
B) 17.86%
C) 14.92%
D) 15.50%

Correct Answer:

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