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Darina [25.2K]
3 years ago
13

Your sister is thinking about starting a new business. The company would require $380,000 of assets, and it would be financed en

tirely with common stock. She will go forward only if she thinks the firm can provide a 13.5% return on the invested capital, which means that the firm must have an ROE of 13.5%. How much net income must be expected to warrant starting the business?
Business
1 answer:
Andrews [41]3 years ago
5 0

Answer:

$51,300

Explanation:

Given that,

Assets require = $380,000

Return on the invested capital, ROE = 13.5%

ROE = Net income ÷ Total Equity

0.135 = Net income ÷ $380,000

0.135 × $380,000 = Net income

$51,300 = Net income

Therefore, the net income must be expected to warrant starting the business is $51,300.

Note: Since, all of the total assets are financed by the common stock.

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Explanation: Familiar to English auctions, the bidders are aware of the prices of items on sale and the numbers of other bidders. This price is known as the reserve or reservation price which is the limit on the price of the item on sale set by the seller (that is the lowest price the seller is willing to sell the item). The bids start at a low price and keeps coming in until there are no more bids irregardless of the reservation price set. It probably depends on how much you value the item on sale and are willing to pay for it. Not necessarily on the reservation price.

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3 years ago
Assuming that ATCHULO Company Ltd is committed to the current design, how would you improve it?
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3 years ago
Why is the statistical validity of a multiple regression design more complicated to interrogate than a bivariate design? a. Thes
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Place the steps for finding the EOQ in a quantity discount model with variable H in the correct order.
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What is the Economic Order Quantity(EOQ)?

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Answer:

Check the explanation

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