Use the Information for the Question(s)below

question 74

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 currently maintains a debt to equity ratio of 1,then the value of Flagstaff as an all-equity firm would be closest to:

• A)$73 million.
• B)$80 million.
• C)$115 million.
• D)$100 million.

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Definitions:

Insomnia

A sleep disorder characterized by difficulty falling asleep, staying asleep, or experiencing non-restorative sleep, leading to distress and impairment in daily functioning.

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Symptoms that occur when a person who has been drinking heavily for a long time suddenly stops or significantly reduces alcohol intake.

Tremulousness

A physical condition characterized by involuntary, rhythmic muscle contractions leading to shaking movements in one or more parts of the body; often a symptom of medical conditions or withdrawal.

Perspiration

The process of sweating, a natural mechanism for the body to regulate temperature.