Question
You need $300,000 to start a new company and you are currently analyzing 4 ways to raise the money. If you project $30,000 net income
You need $300,000 to start a new company and you are currently analyzing 4 ways to raise the money. If you project $30,000 net income the first year, which plan would lead to the highest return on equity (ROE) the first year? Plan 1: The company issues $300,000 worth of stock.
Plan 2: The company issues $250,000 worth of stock and borrows the remaining amount.
Plan 3: The company issues $200,000 worth of stock and borrows the remaining amount.
Plan 4: The company issues $150,000 worth of stock and borrows the remaining amount.
A. Plan 1
B. Plan 3
C. Plan 2
D. Plan 4
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