Use the Information for the Question(s)below

question 34

Multiple Choice

Use the information for the question(s) below.
The Aardvark Corporation is considering launching a new product and is trying to determine an appropriate discount rate for evaluating this new product.Aardvark has identified the following information for three single division firms that offer products similar to the one Aardvark is interested in launching:
-The unlevered cost of capital for Armadillo Industries is closest to:

• A)10.2%.
• B)10.0%.
• C)9.5%.
• D)9.9%.

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Definitions:

After-Tax Income

The amount of net income left after all taxes have been deducted.

Consumption

The use of goods and services by households or individuals for personal or collective needs and satisfaction.

Tax Reduction

A decrease in the amount of taxes imposed by a government.

Price

The price anticipated, required, or paid in exchange for a particular item.