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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Definitions:

New Jersey

A U.S. state located in the Mid-Atlantic region, known for its significant historical contributions, diverse population, and as the site of major battles during the American Revolutionary War.

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A phrase indicating a strong influence or control over the southern United States, often used in historical contexts such as politics or social norms.

Benedict Arnold

An American military officer who served during the Revolutionary War before defecting to the British side in 1780.