Use the Information for the Question(s)below

question 86

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 project is sold to investors as an all-equity firm.The equity holders will receive the cash flows of the project in one year.The market value of the unlevered equity for this project is closest to:

• A)$94,100.
• B)$90,000.
• C)$86,250.
• D)$98,600.

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Definitions:

Biological Approach

A perspective in psychology that emphasizes the importance of physical processes in the body, such as genetic inheritance and neural function, in understanding human behavior.

Psychology

The scientific study of the mind and behavior, examining how individuals think, act, and interact.

Brain

The organ in the head of humans and other vertebrates responsible for thought, memory, emotion, touch, motor skills, vision, breathing, temperature regulation, and other countless functions.

Structuralism

An approach in psychology that analyzes the basic elements of thoughts and sensations to understand the structure of conscious experience.