A Firm Requires an Investment of $36,000 and Borrows $12,000

question 59

Multiple Choice

A firm requires an investment of $36,000 and borrows $12,000 at 9%. If the return on equity is 20%, what is the firm's pretax WACC?

• A) 8.2%
• B) 19.6%
• C) 16.3%
• D) 22.9%

---

Definitions:

Internal Environment

refers to the conditions, processes, and elements within an organization that influence its activities and choices.

Hierarchy of Motives

A structure that ranks human needs and motivations in order of importance, from basic physiological needs to self-actualization.

Maslow

Refers to Abraham Maslow, a psychologist best known for creating Maslow's hierarchy of needs, a theory of psychological health predicated on fulfilling innate human needs in priority, culminating in self-actualization.

Sweet Taste

A sensation recognized primarily on the tongue, triggered by sugar and substances with a similar chemical structure.