Use the Information for the Question(s)below

question 13

Multiple Choice

Use the information for the question(s) below.
Flagstaff Enterprises expected to have free cash flow in the coming year of $8 million,and this free cash flow is expected to grow at a rate of 3% per year thereafter.Flagstaff has an equity cost of capital of 13%,a debt cost of capital of 7%,and it has a 35% corporate tax rate.
-If Flagstaff maintains a debt to equity ratio of 1,then Flagstaff's pre-tax WACC is closest to:

• A)11.0%.
• B)10.5%.
• C)10.0%.
• D)9.0%.

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Definitions:

Account Reconciliation

The process of matching the balances in an entity's accounting records for a cash account to the corresponding information on a bank statement.

Payroll Register

A multicolumn form that is used to record payroll data.

Journal Entries

The recording of financial transactions and events in the books of accounts, in chronological order, detailing the financial effects of business transactions and events.

Payroll Tax Expense

Taxes that are levied on an employer based on the wages and salaries paid to employees.