Cromwell's Interiors Is Considering a Project That Is Equally as Risky

question 26

Multiple Choice

Cromwell's Interiors is considering a project that is equally as risky as the firm's current operations.The firm has a cost of equity of 13.7 percent and a pretax cost of debt of 8.4 percent.The debt-equity ratio is .65 and the tax rate is 40 percent.What is the cost of capital for this project?

• A)9.97 percent
• B)10.29 percent
• C)11.38 percent
• D)11.62 percent
• E)12.30 percent

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Definitions:

Narcissistic

A personality trait characterized by an inflated sense of self-importance, a deep need for excessive attention and admiration, combined with a lack of empathy for others.

Neurotic

A term describing individuals who are prone to emotional instability, anxiety, and other psychological stresses.

Conscientiousness

A personality trait characterized by being diligent, careful, and organized.

Agreeableness

A personality trait that reflects a person's tendency to be compassionate, cooperative, and friendly toward others.