Use the Information for the Question(s)below

question 1

Multiple Choice

Use the information for the question(s) below.
Consider a project with free cash flows in one year of $90,000 in a weak economy or $117,000 in a strong economy,with each outcome being equally likely.The initial investment required for the project is $80,000,and the project's cost of capital is 15%.The risk-free interest rate is 5%.
-Suppose that to raise the funds for the initial investment the firm borrows $80,000 at the risk-free rate,then the value of the firm's levered equity from the project is closest to:

• A)$0.
• B)$10,000.
• C)$6000.
• D)$8600.

---

Definitions:

Heterosexual

A sexual orientation characterized by a romantic or sexual attraction to individuals of the opposite sex.

Heritability

An index of the degree to which a characteristic is estimated to be influenced by heredity.

Sexual Orientation

An enduring pattern of emotional, romantic, or sexual attractions to men, women, both sexes, neither sex, or another sex, as well as a person's sense of identity based on those attractions.

Homosexuality

A romantic or sexual attraction to persons of the same sex.