A New Business Will Generate a One-Time Cash Flow of $25,000

question 48

Multiple Choice

A new business will generate a one-time cash flow of $25,000 after one year.The business will be financed with 20% equity and 80% debt.If the firm's unlevered equity cost of capital is 12%,what is the levered value of the firm with perfect capital markets?

• A)$19,882
• B)$22,321
• C)$22,000
• D)$28,000
• E)$23,000

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Definitions:

Agreeableness

A personality trait characterized by warmth, kindness, empathy, and a willingness to cooperate with others.

Personality Traits

Enduring characteristics that describe an individual's behavior, attitude, and emotional patterns.

Neuroticism

Neuroticism is a personality trait characterized by sadness, moodiness, and emotional instability.

Schizoid Personality Disorder

A personality disorder characterized by a long-term pattern of detachment from social relationships and a range of emotions, leading to a preference for solitary activities.