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:

Nonviolence

A principle or practice of using peaceful means, rather than force, to bring about political or social change.

Booker T. Washington

An influential African American educator, author, and advisor to several U.S. presidents, advocating for African American advancement through education and economic self-reliance.

White Racism

A belief or doctrine asserting the superiority of white people over people of other racial backgrounds, often manifesting in social, economic, and political systems.

Nuclear Weapons

Explosive devices that derive their destructive force from nuclear reactions, either fission or a combination of fission and fusion, posing significant threats to global security.