Use the Information for the Question(s)below

question 68

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 .5 debt to equity ratio,then the value of Flagstaff as an all-equity firm would be closest to:

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

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Definitions:

Communism

A political and economic ideology advocating for a classless society in which property and the means of production are owned communally, and each person works and is remunerated according to their abilities and needs.

Division of Labor

The allocation of different parts of a manufacturing process or task to different people to improve efficiency and productivity.

Repetitive Tasks

Activities or processes that are performed in the same manner repeatedly over a period of time.

Capitalism

A system where the production means are privately owned and goods or services are produced for profit.