Use the Information for the Question(s)below

question 55

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 Antelope Incorporated is closest to:

• A)10.3%.
• B)9.9%.
• C)10.1%.
• D)9.5%.

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Definitions:

Corporate Bond

A debt security issued by a corporation to raise funding, promising to repay the principal along with interest at specified dates.

TIPS Bond

Treasury Inflation-Protected Securities, a type of U.S. government bond designed to help investors protect against inflation by adjusting the principal value based on changes in the consumer price index.

Coupon Rate

The percentage of a bond's face value that is annually paid as interest by the bond.

Par Value

The nominal value of a bond or the stated value of stock as documented in the company's charter, frequently utilized in official paperwork.