10. Inland Trucking is analyzing a new project which requires an initial investment of $750,000 for equipment. The average flotation cost is 10.5 percent. What is the initial cost of the project including the flotation costs? A. $671,250 B. $750,000 C. $828,750 D. $837,989 E. None of the above 12. Farmer's Equipment has 100,000 shares of common stock outstanding at a market price of $50 a share and a market beta of 0.5. Market return is 14% and risk-free rate is 4%. The outstanding bond issue of the company has a face value of $2,000,000 and a market price of $1,200. The maturity of the bonds is 10 years and coupon rate is 9%. Coupons are paid semi- annually. In addition, there are 25,000 shares of preferred stock outstanding at a market price of $40 a share. The cost of preferred stock of 8 percent. The company's tax rate is 40 percent. What is the weighted average cost of capital of Farmer's Equipment? A. 8.68% B. 8.21% C. 7.39% D. 7.57% E. None of the above