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

question 44

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%.
-If Galt's debt cost of capital is 6%,then Galt's equity cost of capital is closest to:

• A)11.2%.
• B)12.0%.
• C)14.8%.
• D)15.5%.

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