1 points Save A regional restaurant chain, Club Caf, is considering purchasing a smaller chain, Sally's Sandwiches, which is currently financed using 20% debt at a cost of 8%. Club Cafe's analysts project that the merger will result in incremental free cash flows and interest tax savings of $2 million in Year 1,54 million in Year 2, 55 million in Year 3 and 5117 million in Year 4. (The Year 4 cash flow includes a horizon value of $107 million.) The acquisition would be made immediately, if it is to be undertaken Sally's pre-merger betais 20. and its post-merger tax rate would be 34%. The risk-free rate is 8%, and the market risk premium is 4%. What is the appropriate rate for use in discounting the free cash flows and the interest tax savings? 12.0% 13.9% 14.4% 16.0% 16.9%