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:

Day-Neutral Plant

A plant whose flowering is not controlled by variations in day length that occur with changing seasons. Compare with long-day, short-day, and intermediate-day plants.

Long-Day Plant

A plant that flowers only after being exposed to light periods longer than a certain critical length, often found in summer.

Arabidopsis

A genus of small flowering plants, with Arabidopsis thaliana being a widely used model organism in plant biology and genetics.

Day-Neutral Plant

A plant that flowers regardless of the length of the period of light it is exposed to.