An Investor Is Considering Starting a New Business

Multiple Choice

An investor is considering starting a new business.The company would require $475,000 of assets, and it would be financed entirely with common stock.The investor 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) $52,230
B) $54,979
C) $57,873
D) $60,919
E) $64,125