FINANCE- The Aardvark Corporation is considering launching a new product

39. 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:Comparable FirmEquity Cost of CapitalDebt Cost of CapitalDebt-to-Value RatioAnteater Enterprises12.50%6.50%50%Armadillo Industries13%6.10%40%Antelope Inc.14%7.10%60%Required: Based upon the three comparable firms, calculate the most appropriate unlevered cost of capital for Aardvark to use on this new product. (4 marks)

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