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A New Business Requires a $20,000 Investment Today,and Will Generate

Question 107

Multiple Choice

A new business requires a $20,000 investment today,and will generate a one-time cash flow of $25,000 after one year.The business will be financed with 50% equity and 50% debt.If the firm can borrow at 7%,what is the pre-tax WACC?


A) 43%
B) 25%
C) 18%
D) 39%
E) 7%

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