Your Sister Is Thinking About Starting a New Business

Multiple Choice

Your sister is thinking about starting a new business.The company would require $300,000 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) $38,475
B) $44,145
C) $33,210
D) $40,500
E) $41,310