A new project is being considered by a P company. The debt-equity ratio of .75. The company's cost of equity is 15.0 percent, and the after-tax cost of debt is 4.0 percent. The project is considered riskier by the company than the company as a whole and an adjustment factor should be use of +1.2 percent. Calculate the project cost of capital if the tax rate is 32 percent ? 10.08 percent 11.02 percent 11.49 percent 16.14 percent

A new project is being considered by a P company. The debt-equity ratio of .75. The company's cost of equity is 15.0 percent, and the after-tax cost of debt is 4.0 percent. The project is considered riskier by the company than the company as a whole and an adjustment factor should be use of +1.2 percent. Calculate the project cost of capital if the tax rate is 32 percent ? 10.08 percent 11.02 percent 11.49 percent 16.14 percent

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 7P: Your division is considering two investment projects, each of which requires an up-front expenditure...

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