A Project Will Give a One-Time Cash Flow of $25,000

question 64

Multiple Choice

A project will give a one-time cash flow of $25,000 after one year.If the project risk requires a return of 12%,what is the levered value of the firm with perfect capital markets?

• A)$19,882
• B)$22,321
• C)$22,000
• D)more information needed

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Definitions:

Net Working Capital

Net working capital is a measure of a company's liquidity, calculated as the difference between its current assets and current liabilities, indicating its short-term financial health.

Fixed Assets

Long-term tangible assets used in the operation of a business and not expected to be converted to cash in the short term.

Depreciation

The process of allocating the cost of a tangible or physical asset over its useful life, representing wear and tear, deterioration, or obsolescence.

Operating Cash Flow

Operating cash flow refers to the cash generated from the normal operating activities of a business within a specific time period.