A Firm Requires an Investment of $20,000

question 50

Multiple Choice

A firm requires an investment of $20,000.The firm's debt cost of capital is 6%,and its return on equity is 15%.If the firm's pre-tax WACC is 10.5%,how much did the firm borrow?

• A)$8,000
• B)$10,000
• C)$12,000
• D)$14,000
• E)$20,000

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Definitions:

Small Businesses

Enterprises or firms characterized by fewer employees, lower annual revenue, and smaller scale of operations than larger corporations.

Inability to Innovate

The lack of capability or creativity in developing new products, services, or processes, which can hinder a business's growth and competitiveness.