Use the Table for the Question(s)below

question 25

Multiple Choice

Use the table for the question(s) below.
Capital Structure and Unlevered Beta Estimates for Comparable Firms
-If the risk-free rate of interest is 6% and the market risk premium has historically averaged 5%,then the cost of capital for Luxottica is closest to:

• A)10.2%.
• B)13.5%.
• C)9.1%.
• D)14.7%.

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Definitions:

Tax Rate

The percentage at which an individual or corporation is taxed on their income or profits.

Utility Function

A representation in economics that maps a set of goods and services into a level of utility or satisfaction.

Leisure

Time available for ease and relaxation where no work is done.

Consumption Goods

Goods that are intended and consumed by individuals or households to satisfy their immediate wants and needs.