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.

---

Definitions:

Sexual Energy

A term often used to describe the force or drive behind sexual actions and desires, considered a powerful aspect of human physiology and psychology.

Freud

The pioneer of psychoanalytic theory, emphasizing unconscious motivations and conflicts as key drivers of human behavior.

Id

In psychoanalytic theory, the part of the mind in which innate instinctive impulses and primary processes are manifest.

Oral Stage

The first stage in Freud's psychosexual development theory, occurring from birth to 18 months, where pleasure centers on the mouth.