Multiple Choice
A new business requires a $20,000 investment today,and will generate a one-time cash flow of $25,000 after one year.The business will be financed with 50% equity and 50% debt.If the firm can borrow at 7%,what is the return on levered equity?
A) 43%
B) 25%
C) 18%
D) 39%
E) 7%
Correct Answer:
Verified
Correct Answer:
Verified
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