Use the Information for the Question(s)below

question 48

Multiple Choice

Use the information for the question(s) below.
Consider a project with free cash flows in one year of $90,000 in a weak economy or $117,000 in a strong economy,with each outcome being equally likely.The initial investment required for the project is $80,000,and the project's cost of capital is 15%.The risk-free interest rate is 5%.
-Suppose that to raise the funds for the initial investment the firm borrows $80,000 at the risk-free rate,then the cash flow that equity holders will receive in one year in a strong economy is closest to:

• A)$0.
• B)$6000.
• C)$33,000.
• D)$10,000.

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Definitions:

External Noise

Distractions that originate outside the communicator that can interfere with the transmission of a message, affecting its reception and understanding.

Effective Listening

The active process of attentively receiving, interpreting, and responding to verbal and non-verbal messages.

Communication Relationship

The connection between individuals that is established and maintained through the exchange of messages and information.

Accurate Understanding

The correct comprehension or interpretation of a message or situation, reflecting an effective communication process.