A New Business Will Generate a One-Time Cash Flow of $22,000

question 111

Multiple Choice

A new business will generate a one-time cash flow of $22,000 after one year.The business will be financed with 60% equity and 40% debt.If the firm's unlevered equity cost of capital is 11%,what is the levered value of the firm with perfect capital markets?

• A)$18,182
• B)$20,000
• C)$19,820
• D)$24,200
• E)$19,580

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Definitions:

Divisionalized Structures

Divisionalized structures are organizational frameworks where the company is divided into distinct units, each with its own set of functions and responsibilities, aimed at addressing specific operational needs.

Functional Structures

An organizational design that groups employees based on their roles or functions, enhancing specialization and efficiency.

Economies of Scale

The cost advantage achieved when production becomes efficient, as the output increases, the per unit cost decreases.

Superordinate Goals

Shared goals that can only be achieved through the cooperation of two or more parties, often used to overcome intergroup conflict.