Use the Information for the Question(s) Below

question 79

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 marginal tax rate is 35%, 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,r_wacc,for this project is closest to:

• A) 10.5%
• B) 11.1%
• C) 9.6%
• D) 10.8%

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