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

question 85

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%.
-The value of Galt's equity using the WACC method is closest to:

• A)$137 million.
• B)$180 million.
• C)$230 million.
• D)$240 million.

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Definitions:

Public Saving

The difference between tax revenues and government expenditures, typically representing the amount of surplus funds the government has.

Closed Economy

An economic system that does not engage in international trade, instead relying on its own internal markets for goods and services.

Accounting Identity

An equation that must always be true due to the way variables are defined, commonly used in economics and accounting to reflect the balance between different components.

Tax Rate

The percentage at which an individual or corporation is taxed by the government.