Use the Information for the Question(s)below

question 86

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 project is sold to investors as an all-equity firm.The equity holders will receive the cash flows of the project in one year.The market value of the unlevered equity for this project is closest to:

• A)$94,100.
• B)$90,000.
• C)$86,250.
• D)$98,600.

---

Definitions:

Behavioral Theories

Theories in psychology that focus on understanding and modifying behavior through learning processes, such as conditioning, reinforcement, and observation.

Complex Process of Change

The intricate and multifaceted procedure through which transformation or modification occurs within an individual, group, or system.

Unfreezing

A term from Lewin's change theory, referring to the process of preparing individuals or organizations for change by overcoming inertia.

Recognizing Resistance

The process of identifying opposition or non-compliance, commonly in the context of therapy or behavior change.