Question

Answer true or false to the following statements:
a. The return on equity for a project will always be higher than the return on capital on the same project.
b. If the return on capital is less than the cost of equity, the project should be rejected.
c. Projects with high financial leverage will have higher interest expenses and lower net income than projects with low financial leverage and thus end up with a lower return on equity.
d. Increasing the depreciation on an asset will increase the estimated return on capital and equity on the project.
e. The average return on equity on a project over its lifetime will increase if we switch from straight line to double declining balance depreciation.


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  • CreatedApril 15, 2015
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