Multiple Choice
Jimbob Co.is considering ways to finance a planned business expansion after which the company will have $150,000 in earnings before interest and income taxes.The income tax rate is 30%.One alternative being considered is to issue new common shares.If this alternative is chosen the company's common shareholders' equity is expected to average $1,000,000.What will be the return on common shareholders' equity if this alternative is taken?
A) 0%.
B) 10.5%.
C) 15%.
D) 30%.
Correct Answer:
Verified
Correct Answer:
Verified
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