Use Next Year's Cash Flow Forecast for Blank Company to Answer

question 27

Multiple Choice

Use next year's Cash Flow Forecast for Blank Company to answer the following questions:

-Suppose Blank Company has only one project,as forecast above,and an unlevered cost of equity of 8%.If the company borrows $10,000 at 5% to make the investment,what is the return to equity holders if demand is weak?

• A)8.0%
• B)-37.5%
• C)-58.6%
• D)-35.3%

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