Use the Information for the Question(s)below

question 1

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 value of the firm's levered equity from the project is closest to:

• A)$0.
• B)$10,000.
• C)$6000.
• D)$8600.

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Definitions:

Independence

The condition of a nation, country, or state which exercises self-government, and sovereignty, free from external control.

Moravians

Members of a Protestant denomination known for its missionary work, originating from the followers of Czech reformer Jan Hus in the Moravia region of the Czech Republic.

Pacifist Beliefs

Refers to the opposition to war or violence as a means of settling disputes or principles opposing the use of force.

Revivalist Efforts

describes initiatives aimed at reinvigorating or renewing interest in a particular religious, cultural, or societal movement or idea.