10. A company has the following capital structure: Market value Security Beta Debt Preferred stocks Common stocks The risk-free rate is 5% and the market risk-premium is 5%. 360 120 480 A. What is the expected return on equity (cost of equity): (a) 11,8% (b) 9,8% (c) 12,8% (d) 10,8% B. What discount rate should the company use for evaluating investment projects with similar risk (Tc=16%)? (a) 10% (b) 11% (c) 8,325% (d) 11,255%