Answered: A firm requires an investment of…

A firm requires an investment of $30,000 and will return $35,500 after 1 year. If the firm borrows $20,000 at 7% what is the return on levered equity? O A. 41.0% O B. 32.8% OC. 57.4% O D. 49.2%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

A firm requires an investment of $30,000 and will return $35,500 after 1 year. If the firm borrows $20,000 at 7% what is the return on levered equity?
O A. 41.0%
O B. 32.8%
OC. 57.4%
O D. 49.2%

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