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

question 24

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 15.4 percent and a pretax cost of debt of 8.9 percent.The debt-equity ratio is .46 and the tax rate is 34 percent.What is the cost of capital for this project?

• A)11.97 percent
• B)12.40 percent
• C)11.02 percent
• D)11.62 percent
• E)12.38 percent