Use the Following Information to Answer the Question(s)below

question 97

Multiple Choice

Use the following information to answer the question(s) below. The risk-free rate of interest is 3% and the market risk premium is 5%.
-The cost of capital for the oil exploration division is closest to:

• A)6.0%.
• B)7.0%.
• C)8.5%.
• D)10.0%.

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Definitions:

Measures Of Central Tendency

Indicators of what is occurring in the mid-range or “center” of a group of scores. Three measures of central tendency are the mean, median, and mode.

Variability

The degree of dispersion or spread in a set of data points, indicating how much the scores differ from each other and from the average.

Mean

The mean value of a collection of numbers, determined by summing all the numbers and then dividing by the total count of those numbers.

Mode

The value that appears most frequently in a given set of data.