Use the Information for the Question(s)below

question 49

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 firm borrows $80,000 at the risk-free rate,then the cash flow that equity holders will receive in one year in a weak economy is closest to:

• A)$6000.
• B)$10,000.
• C)$0.
• D)$33,000.

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Definitions:

External Adaptation

A pattern of basic assumptions shared between employees of the goals, tasks, and methods that need to be achieved, together with ways of managing success and failure.

Outside Influences

External factors or forces that can affect a person's decisions, behaviors, or outcomes, often beyond their immediate control.

External Adaptation

The process through which an organization or individual adjusts to changes in the external environment to survive and thrive.

Internal Integration

A shared identity with agreed-upon methods of working together.