A Firm Requires an Investment of $30,000 and Borrows $10,000

question 23

Multiple Choice

A firm requires an investment of $30,000 and borrows $10,000 at 6%.If the return on equity is 15% and the tax rate is 30%,what is the firm's WACC?

• A)11.4%
• B)12.3%
• C)7.8%
• D)10.1%

---

Definitions:

Interest Accrue

The accumulation of interest expenses or revenues that have been incurred but not yet paid or received in cash.

Note Payment

The process of repaying the principal and/or interest on a promissory note or loan.

IFRS

International Financial Reporting Standards, which are a set of accounting principles used globally to ensure financial reporting consistency and transparency.

Current Liabilities Netted

The process of offsetting current assets against current liabilities to determine the net working capital or financial position in the short term.