Assume a Zero Percent Discount Rate for Simplicity

question 1

Multiple Choice

Assume a zero percent discount rate for simplicity. Your current projects cost $200, and you know they will return $800 next year. There is a new project that will cost $300 and will return
$500. Your investors believe, however, that both the current projects and the new projects will
Return only 50%. If you have no cash and can use only equity financing, what will the value of
The combined firm be to the existing shareholders if the new project is undertaken?

• A)$780
• B)$520
• C)$750
• D)$800

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Definitions:

Discharged Employees

Workers who have been terminated from their job for various reasons, which can include layoffs, misconduct, or the completion of a contract.

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Possible Defenses

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