191. TKT Inc. is considering investing in a project located at an emerging country. An analyst has gathered the following information:

• The yield on the emerging countrys U.S. dollar-denominated 10-year government bond is 7.0%.
• The yield on 10-year U.S. Treasury bond is 4.8%.
• The annualized standard deviation of the emerging country index is 25%.
• The annualized standard deviation of the emerging countrys U.S. dollar-denominated

10-year government bond is 16%.

• The appropriate beta for the project is 1.4.
• The market risk premium is 8%.
• The risk-free interest rate is 6%.

The appropriate country risk premium and the cost of equity that TKT should use for the project in the emerging country are closest to:

	Country Risk Premium	Cost of Equity
A.	0.014	0.172
B.	0.014	0.192
C.	0.034	0.220