Need help with this financial accounting question Sterling Enterprises is financed with 40% debt, on which it pays 8%interest. What is the expected return on equity if the expected returnon assets is 12%?A. 13.33%B. 14.67%C. 12.86%D. 15.20%

Step 1: Define Return on Equity (ROE) Using Leverage FormulaThe Return on Equity (ROE) measures the…

Answered: Sterling Enterprises is financed with…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter13: Capital Structure Concepts

Section: Chapter Questions

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Sterling Enterprises is financed with 40% debt, on which it pays 8% interest. What is the expected return on equity if the expected return on assets is 12%? A. 13.33% B. 14.67% C. 12.86% D. 15.20%