Use the Following Information to Answer the Question(s)below

question 18

Multiple Choice

Use the following information to answer the question(s) below.
Galt Industries is expected to generate free cash flows of $24 million per year.Galt has permanent debt of $80 million,a corporate tax rate of 21%,and an unlevered cost of capital of 12% and its cost of debt capital is 6%.
-Galt's WACC is closest to:

• A)6.0%.
• B)9.6%.
• C)11.1%.
• D)10.7%.

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Definitions:

Factor Market

A marketplace where factors of production (land, labor, capital, entrepreneurship) are bought and sold, affecting the prices and allocation of these resources.

Resource

Anything, such as land, labor, and capital, that can be used to produce something else; includes natural resources (from the physical environment) and human resources (labor, skill, intelligence).

Circular-Flow Diagram

A visual model that depicts how goods, services, and money move through an economy, illustrating the interactions between households and firms.

Sector

A distinct subset of a market, economy, or field of operation, often categorized by similar characteristics or types of economic activity.