A Firm Requires an Investment of $20 000 and Borrows

question 99

Multiple Choice

A firm requires an investment of $20 000 and borrows $10 000 at 8%. If the return on equity is 20% and the tax rate is 30%, what is the firm's WACC?

• A)11.4%
• B)12.1%
• C)12.8%
• D)13.2%

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Definitions:

Alluvial Fans

Cone-shaped deposits of sediment crossed and built up by streams, typical at the base of mountain ranges in arid and semi-arid climates.

Hazardous Zone

An area that poses risks to human health, property, or the environment due to natural or human-made hazards.

Debris Flow Deposits

Accumulations of material, including rocks, soil, and vegetation, transported and deposited by fast-moving flows of water mixed with debris.

Weak Acids

are acids that do not fully dissociate in aqueous solution, resulting in a low concentration of hydrogen ions.