A company would like to figure out if a 10-year project is worth it. The company is in the 32% income tax bracket.

Here's what else is known:

The company would like to use the WACC approach to evaluate this levered project. According to this approach:

R_WACC = (Weight of levered equity) x (Cost of levered equity) + (1 - T_C) x (Weight of debt) x (Cost of debt)

In this formula, weight of levered equity = , cost of levered equity = , T_C = , weight of debt = . and cost of debt = . The resulting R_WACC =

Project's initial cost: $700,000 Project's after-tax cash flow: $100,000 per year If it doesn't use a loan Beta of the company's equity = 1.5 = Required return on the company's equity = 18.5% = If it uses a loan 70% of the initial cost would be covered with an interest-only riskless loan Even more information: Treasury bill rate = 5%. It is a proxy for the riskless asset. Market portfolio expected return 14%