Use the Information for the Question(s)below

question 10

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 .5 debt to equity ratio,then Flagstaff's pre-tax WACC is closest to:

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

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Definitions:

Prefrontal Areas

Regions of the frontal lobes of the brain that are involved in complex behaviors including planning, decision-making, and moderating social behavior.

Amygdala

A small almond-shaped structure in the tip of the temporal lobe that plays a role in emotional behaviour.

Paranoid

A mental state characterized by persistent delusions of persecution or unwarranted mistrust and suspicion of others.