A Project Will Give a One-Time Cash Flow of $22,000

question 72

Multiple Choice

A project will give a one-time cash flow of $22,000 after one year. If the project risk requires a return of 10%, what is the levered value of the firm with perfect capital markets?

• A) $20,000
• B) $16,000
• C) $24,000
• D) more information needed

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Definitions:

Political Economy

The study of production, trade, and their relationship with law, custom, and government, as well as with the distribution of national income and wealth.

Constitution

A written or unwritten system of fundamental laws and principles governing a nation, state, or organization.

Markets

Physical or virtual places where goods, services, or securities are exchanged between buyers and sellers.

Positivism

A philosophical approach asserting that knowledge should be based on empirical and scientific evidence rather than theories.