Use the Information for the Question(s)below

question 86

Multiple Choice

Use the information for the question(s) below.
Consider a project with free cash flows in one year of $90,000 in a weak economy or $117,000 in a strong economy,with each outcome being equally likely.The initial investment required for the project is $80,000,and the project's cost of capital is 15%.The risk-free interest rate is 5%.
-Suppose that to raise the funds for the initial investment,the project is sold to investors as an all-equity firm.The equity holders will receive the cash flows of the project in one year.The market value of the unlevered equity for this project is closest to:

• A)$94,100.
• B)$90,000.
• C)$86,250.
• D)$98,600.

---

Definitions:

Interior Indian Tribes

Refers to indigenous groups who live within the interior regions of North America, away from the coastal areas.

Colonists' Relationship

Colonists' Relationship pertains to the interactions and connections between early European settlers in foreign territories and the indigenous populations, other colonists, or their home countries, often marked by trade, conflict, and cultural exchanges.

Skilled Craftsmen

Workers who have specialized training and expertise in a particular craft or trade, historically crucial to various industries and the economy.

Educated Elite

Individuals who have achieved a high level of education and often hold positions of power or influence within society.