17.Fred Corp. is trying to decide what cost of capital it should assign to a project. Which one of the following should be the primary consideration in this decision?

a.

Use, or lack, of preferred stock as a financing option

b.

Mix of funds used to finance the project

c.

Amount of debt used to finance the project

d.

Risk level of the company

e.

Cost of capital for equivalent-risk projects

18.If Treasury bills are currently paying 2.84 percent and the inflation rate is 1.93 percent, what is the approximate real rate of interest? The exact real rate?

a.

1.19 percent; 1.20 percent

b.

1.21 percent; 1.20 percent

c.

0.91 percent; 0.89 percent

d.

0.89 percent; 0.91 percent

e.

1.21 percent; 1.19 percent