A Firm Requires an Investment of $20 000 and Borrows

question 93

Multiple Choice

A firm requires an investment of $20 000 and borrows $10 000 at 8%. If the return on equity is 20%, what is the firm's pre-tax WACC?

• A)14%
• B)17%
• C)16%
• D)15%

---

Definitions:

Nodding

A simple physical gesture, usually involving a downward or upward movement of the head, to indicate agreement, acknowledgment, or understanding.

Empower Clients

The approach of giving clients the skills, resources, and confidence to take control of their own lives and decisions.

Basic Sources

Fundamental or primary materials and resources that provide essential information or evidence for research, study, or information gathering.

Social Environment

The immediate physical and social setting in which people live or in which something happens or develops, including the culture, institutions, and people around them.