A Project Will Give a One-Time Cash Flow of $25,000

question 39

Multiple Choice

A project will give a one-time cash flow of $25,000 after one year. If the project risk requires a return of 12%, what is the levered value of the firm with perfect capital markets?

• A) $22,000
• B) $22,321
• C) $19,882
• D) more information needed

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Definitions:

Net Income

Net income represents the total earnings of a company after subtracting all expenses, taxes, and costs from its total revenue, indicating the actual profit made during a specified period.

Total Assets

The sum of all resources owned by a company, valued in monetary terms, which includes tangible and intangible items.

Owner's Equity

The amount of assets owned by a business's owner after all liabilities have been deducted.

Average Inventory

The mean amount of inventory a business holds over a certain period of time, calculated to understand inventory levels and turnover.