Final answer:
Lodec Inc. is a family-controlled firm that generated $18 million in after-tax operating income on $300 million of capital. The cost of capital is 10%.
Step-by-step explanation:
Lodec Inc. is a small, publicly traded firm that is controlled and run by the Lodec family. This situation is often referred to as a family-controlled or family-owned firm. The family members own the majority of voting shares in the company and have the power to appoint all board members.
Last year, the firm generated $18 million in after-tax operating income. This amount represents the profit generated by the firm after deducting all operating expenses and taxes. The capital invested in the firm was $300 million, which represents the amount of money invested in the company to generate this profit.
The cost of capital is the rate of return required by investors in order to invest in a company. In the case of Lodec Inc., the cost of capital is 10%. This means that the company must generate a return of at least 10% on the capital invested in order to satisfy its investors.