Use the Information for the Question(s)below

question 82

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's interest tax shield is closest to:

• A)$10 million.
• B)$18 million.
• C)$11 million.
• D)$13 million.

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Definitions:

Ida B Wells

An African American journalist, abolitionist, and feminist who led an anti-lynching crusade in the United States during the 1890s.

Lynching

The illegal execution of an individual by a mob, often by hanging, without a legal trial, historically common in the United States as a form of racial terror against African Americans.

Memphis

A city in the southwestern part of the U.S. state of Tennessee, significant for its historical and cultural contributions.

Progressive State Politics

A political stance or movement emphasizing social reform, democratisation, and efforts to mitigate the effects of inequality and ensure the welfare of citizens through state intervention.