A Firm Is Considering a Project That Will Generate Perpetual

question 89

Multiple Choice

A firm is considering a project that will generate perpetual cash flows of $50,000 per year beginning next year.The project has the same risk as the firm's overall operations.If the firm's WACC is 12%,and its debt-to-equity ratio is 1.33,what is the most it could pay for the project and still earn its required rate of return?

• A) $313,283
• B) $375,094
• C) $416,667
• D) $554,167

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Definitions:

Sales Reward

Incentives or bonuses given to sales personnel or customers to motivate purchases or reward performance achievements.

Operationalized

The process of defining a research variable in practical, measurable terms, allowing it to be quantitatively or qualitatively captured.

Postsale Problems

Postsale Problems refer to issues or complaints customers experience with a product or service after the purchase has been made, necessitating support or resolution.

Possession

The act of owning or the state of being owned, denoting the control a person or entity has over an object, property, or asset.