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An investor is considering starting a new business. The company would require $475,000 of assets, and it would be financed entirely with common stock. The investor 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 a ROE of 13.5%. How much net income must be expected to warrant starting the business?

a) $52,230

b) $54,979

c) $57,873

d) $60,919

e) $64,125

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M976177

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