Use the Information for the Question(s)below

question 19

Multiple Choice

Use the information for the question(s) below.
KT Enterprises is considering undertaking a new project.Based upon analysis of firms with similar projects,KT has determined that an unlevered cost of equity of 12% is suitable for their project.KT's corporate tax rate is 21%,its borrowing rate is 7%,and KT does not believe that its borrowing rate will change if the new project is accepted.
-If KT expects to maintain a debt to equity ratio for this project of .6 then KT's project-based WACC,rwacc,for this project is closest to:

• A)10.5%.
• B)11.5%.
• C)9.6%.
• D)10.8%.

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Definitions:

Property Damage

Harm or destruction that affects the value or use of physical property.

Personal Injuries

Physical or emotional harm caused to an individual, often leading to legal action in order to receive compensation.

Appraisal Clause

A provision in insurance policies requiring disputes over the value of a claim to be resolved by an independent appraiser.

Impartial

Unbiased and neutral without favoring one side over another.