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:

Real GDP

Real GDP refers to the total economic output of a country, adjusted for price changes or inflation, representing the actual value of goods and services produced over a specific period.

GDP

Summarizing the value of all final goods and services made within a country's borders in monetary or market terms during a specific time frame is what Gross Domestic Product is about.

GDP Deflator

A metric that assesses the prices of all new, internally produced final goods and services in an economic system, employed in the adjustment of nominal GDP to real GDP.

Real GDP

Real Gross Domestic Product (Real GDP) measures the value of all finished goods and services produced within a country's borders in a specific period, adjusted for inflation.