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melomori [17]
3 years ago
12

Successful use of financial leverage requires a firm to:

Business
1 answer:
Y_Kistochka [10]3 years ago
8 0

Answer: d. earn a higher return on its investments than the interest rate it pays to acquire funds.

Explanation:

When firms borrow money they usually do it with one thing in mind, that is to maximise or to make more profit. They believe that with the borrowed money they can improve the operations of the business and therefore make higher returns.

Seeing as they would have to pay the bank or financial institution they lent the money from a certain amount of interest, it would be within their best interests to make enough money from their investments to pay off the leverage. Not only also, do they have to make enough to pay off the loan but they have to make higher than that so that they can actually make a profit after paying off the interest on the leverage.

This is why their investments must give a higher rate return than the interests rate they pay for the leverage.

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John would like to move from the city into the suburbs and has been saving up a large down payment for a home. Which is the most
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The most cost effective way for John to buy a house in the suburbs is:

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2 years ago
We are evaluating a project that costs $744,000, has a six-year life, and has no salvage value. Assume that depreciation is stra
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