A Firm Requires an Investment of $30 000 and Borrows

question 83

Multiple Choice

A firm requires an investment of $30 000 and borrows $20 000 at 7%. If the return on equity is 15% and the tax rate is 30%, what is the firm's WACC?

• A)9.13%
• B)10.4%
• C)8.91%
• D)8.27%

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Definitions:

Research Methods

The various strategies, techniques, and tools used by scientists to gather and analyze data.

Scientific Approach

A method of research whereby a problem is identified, relevant data is gathered, a hypothesis is formulated, and the hypothesis is empirically tested.

Precision

The quality of being exact, accurate, and careful about details.

Intolerance Of Error

A psychological state or organizational culture where mistakes are not tolerated, leading to high stress and potential stifling of creativity or learning.