A Firm Requires an Investment of $30,000 and Borrows $10,000

question 45

Multiple Choice

A firm requires an investment of $30,000 and borrows $10,000 at 6%. If the return on equity is 15% and the tax rate is 30%, what is the firm's WACC?

• A) 11.4%
• B) 10.1%
• C) 7.8%
• D) 12.3%

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Definitions:

Sustainable Yield

The rate at which a natural resource can be harvested without compromising its ability to regenerate or sustain its future productivity.

Renewable Resources

Natural resources that can be replenished at a rate comparable to their consumption, such as solar energy, wind, and biomass.

Perpetual Resources

Resources that are continuously available and not significantly diminished by human use, such as solar energy.

Global Climate Change

Long-term changes in temperature, precipitation, and weather patterns on Earth, largely attributed to human activities.