A New Business Will Generate a One-Time Cash Flow of $20,000

question 71

Multiple Choice

A new business will generate a one-time cash flow of $20,000 after one year.The business will be financed with 50% equity and 50% debt.If the firm's unlevered equity cost of capital is 10%,what is the levered value of the firm with perfect capital markets?

• A)$18,182
• B)$20,000
• C)$19,000
• D)$22,000
• E)$18,000

Apply the concept of utility maximization to determine optimal consumption choices in various scenarios.

Interpret the implications of different utility functions on consumption decisions.

Evaluate the effect of technological or environmental changes on consumption and saving decisions.

Understand the role of loan and savings interest rates on investment decisions.

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Definitions:

Protein Spike

A protrusion on the surface of some viruses, such as the coronavirus, which facilitates attachment and entry into host cells.

Receptor Protein

Protein located in the plasma membrane or within the cell; binds to a substance that alters some metabolic aspect of the cell.

Latent

Present but not visible, apparent, or actualized; existing as potential.

Retrovirus

RNA virus, containing the enzyme reverse transcriptase, that carries out RNA/DNA transcription.