A Firm Requires an Investment of $20,000

question 20

Multiple Choice

A firm requires an investment of $20,000.The firm's debt cost of capital is 5%,and its return on equity is 12%.If the firm's pre-tax WACC is 7.8%,how much equity did the firm use for its investment?

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

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Definitions:

Indirect Labor

Labor costs associated with the production process that cannot be directly linked to specific units or products, such as maintenance personnel salaries.

Manufacturing Equipment

Machines and tools used in the process of producing goods.

Direct Materials

Direct materials are raw materials that can be directly attributed to the production of goods.

Product Costs

Product costs are the expenses directly associated with the production of goods, including raw materials, labor, and manufacturing overhead.