A Firm Requires an Investment of $60,000 and Borrows $20,000

question 86

Multiple Choice

A firm requires an investment of $60,000 and borrows $20,000 at 8%. If the return on equity is 14% and the tax rate is 30%, what is the firm's WACC?

• A) 11.2%
• B) 9.0%
• C) 13.4%
• D) 22.4%

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Definitions:

Biotic Potential

The maximum reproductive capacity of an organism under optimum environmental conditions.

Reproduction

The process of producing a new individual of the same kind.

Survival

The ability of an organism to continue living or existing, often despite facing adverse conditions.

Exponential Growth

Growth whose rate becomes ever more rapid in proportion to the growing total number or size.