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:

Log10

Log10 refers to the logarithmic function with base 10, used to determine the power to which the base must be raised to obtain a given number.

Natural Logarithm

The logarithm to the base e, where e is an irrational constant approximately equal to 2.718.

Stdlib.h

A header file in the C standard library that contains declarations for standard utility functions for performing general functions, such as dynamic memory allocation, random numbers, and other utilities.

Rand()

A function in many programming languages used to generate a pseudo-random number within a specified range.