Use the Information for the Question(s)below

question 13

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 debt to equity ratio of 1,then Flagstaff's pre-tax WACC is closest to:

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

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Definitions:

Initiation Rites

Are rituals that signify transition from one group to another and ensure loyalty to the new group.

Total Institutions

Places where people are separated from the rest of society and have their lives controlled and regulated by the administrative staff, such as prisons, hospitals, or military barracks.

Resocialization

The process by which individuals learn new norms, values, attitudes, and behaviors, replacing those from their previous roles or environments.

Preindustrial Societies

Societies characterized by an economy based on agriculture and small-scale manufacturing, with limited technological development.