Which of the following situations represents a successful use of financial leverage?
a. A firm issues new shares of stock and uses the proceeds from the sale to retire its outstanding debt.
b. A firm borrows money at 8% and earns an 11% return on its investment of these funds.
c. A firm attracts the interest of two venture capitalists, and plays one against the other to gain the best deal.
d. A retail firm purchases merchandise at $10 and sells it for $15.
Answers (1)
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Which of the following situations represents a successful use of financial leverage? a. A firm issues new shares of stock and uses the ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
A company had service revenue of $257,000, rent expense of $10,700, utility expense of $4,200, salary expense of $19,200, depreciation expense of $9,700, advertising expense of $4,570, dividends in the amount of $18,700, and a beginning balance in
Answers (1)
Finance Which of the following is a drawback of doing business with an online bank? A. Lack of deposit locations B. Account can be accessed anywhere C. 24 hours/7 days a week business hours D. No waiting in lines
Answers (1)
Arguments against social responsibility
Answers (1)
Unsystematic risk: a. can be effectively eliminated through portfolio diversification. b. is compensated for by the risk premium. c. is measured by beta. d. cannot be avoided if you wish to participate in the financial markets. e. All of the above.
Answers (2)
Grace acquired an activity four years ago. The loss from the activity is $50,000 in the current year (at-risk basis of $40,000 as of the beginning of the year). Without considering the loss from the activity, she has gross income of $140,000.
Answers (1)
New Questions in Business
A company that makes shopping carts for supermarkets and other stores recently purchased some new equipment that reduces the labor content of the jobs needed to produce the shopping carts.
Answers (1)
Tumbler Co. had an inventory balance of $15,250 on January 1, purchased $34,000 during the accounting period, and the cost of goods sold was $28,000. What is the ending balance in the inventory account?
Answers (1)
On January 2, 2012, Farr Co. issued 10-year convertible bonds at 105. During 2012, these bonds were converted into common stock having an aggregate par value equal to the total face amount of the bonds.
Answers (1)
Why is an organizational structure important? A. It allows having minimum resources to complete tasks. B. It allows clumsy or unclear reporting structure, C. It ensures that the right people occupy the right positions. D.
Answers (1)
If products A and B are complements and the price of B decreases, the A. demand curves for both A and B will shift to the left. B. amount of B purchased will increase, but the demand curve for A will not shift. C.
Answers (1)