A Firm Requires an Investment of $20,000 and Borrows $10,000

question 64

Multiple Choice

A firm requires an investment of $20,000 and borrows $10,000 at 8%. If the return on equity is 20%, what is the firm's pretax WACC?

• A) 15%
• B) 17%
• C) 14%
• D) 16%

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Definitions:

Imperialism

A policy of extending a country's power and influence through colonization, use of military force, or other means.

Accessible Port

A port that is easily approachable or reachable, facilitating the movement of goods and travelers.

Pacific Ocean

The largest and deepest of Earth's oceanic divisions, extending from the Arctic Ocean in the north to the Southern Ocean in the south.

Spanish-American War

A conflict fought in 1898 between Spain and the United States, resulting from U.S. intervention in the Cuban War of Independence, leading to U.S. acquiring territories in the western Pacific and Latin America.