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:

Negative Covenant

A clause in a loan or bond agreement that restricts certain activities by the borrower to protect the lender's interests.

Capital Expenditures

Capital expenditures are funds used by a company to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment.

Cash Dividends

Payments made by a corporation to its shareholder members. It is the share of profits distributed in cash.

Borrower's Creditworthiness

An assessment of a borrower's ability to repay their debts on time, often considered by lenders before issuing a loan.