A Firm Requires an Investment of $30,000 and Borrows $20,000

question 107

Multiple Choice

A firm requires an investment of $30,000 and borrows $20,000 at 7%.If the return on equity is 15% and the tax rate is 30%,what is the firm's WACC?

• A)8.27%
• B)9.13%
• C)10.4%
• D)8.91%

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Definitions:

Greed Is Good

A phrase popularized by the film "Wall Street" (1987) to encapsulate the idea that unbridled financial self-interest and the pursuit of personal wealth are positive forces in society.

Wall Street Trader

An individual who buys and sells stocks or other financial instruments on Wall Street, the heart of the financial district in New York City.

Roots

A television miniseries based on Alex Haley's 1976 novel "Roots: The Saga of an American Family," tracing the ancestry of the author back to Africa and through seven generations.

Wealth And Consumption

Refers to the abundance of valuable resources or material possessions and the process of using goods and services.