In the context of debt financing, if a firm invests the borrowed funds profitably, the use of debt can substantially improve the _____ to the shareholders.
A) total contract value
B) resource rent
C) return on equity
D) gross profit

Question

Quizplus · Accepted Answer

Using debt financing can increase the return on equity (ROE) because it allows a firm to leverage borrowed funds to generate higher profits, thus enhancing returns for shareholders.

In the Context of Debt Financing, If a Firm Invests