Bruin Inc. is investing in a new project with a similar risk profile as its other projects. Considering that the cost of equity is 10.7%, the cost of debt is 7% and the company's tax rate is 35%, what is the appropriate discount rate for the project if the debt/equity ratio is 0.5? a. 6.6000% b. 7.6250% c. 8.8500% d. 8.2333% e. 8.6500%

Bruin Inc. is investing in a new project with a similar risk profile as its other projects. Considering that the cost of equity is 10.7%, the cost of debt is 7% and the company's tax rate is 35%, what is the appropriate discount rate for the project if the debt/equity ratio is 0.5? a. 6.6000% b. 7.6250% c. 8.8500% d. 8.2333% e. 8.6500%

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter11: Capital Budgeting And Risk

Section: Chapter Questions

Problem 6P

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