Your Sister Is Thinking About Starting a New Business

Multiple Choice

Your sister is thinking about starting a new business.The company would require $375,000 of assets,and it would be financed entirely with common stock.She will go forward only if she thinks the firm can provide a 13.5% return on the invested capital,which means that the firm must have an ROE of 13.5%.How much net income must be expected to warrant starting the business?

A) $41,234
B) $43,405
C) $45,689
D) $48,094
E) $50,625