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

question 90

Multiple Choice

Use the following information to answer the question(s) below.
Galt Industries has no debt,total equity capitalization of $600 million,and an equity beta of 1.2.Included in Galt's assets is $90 million in cash and risk-free securities.Assume the risk-free rate is 4% and the market risk premium is 6%.
-Galt's WACC is closest to:

• A)10.6%.
• B)11.2%.
• C)11.8%.
• D)12.5%.

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Definitions:

Formalized Rules

Explicitly stated regulations or guidelines designed to structure certain behaviors or operations within an organization.

Centralized Authority

A management structure where decision-making and direction come from a single point or very few points within the organization.

Divisional

Pertaining to a type of organizational structure where operations are segmented based on products, services, markets, or geographies, each with its own management.

Organizational Structure

Describes the way in which a company arranges its lines of authority, communications, rights, and duties.