After calculating the value of each source of funds, you determine debt $=50\%$; preferred $=5\%$; common $=45\%,$ estimate the cost of capital, assuming the cost of new debt $=7\%$; preferred $=9\%$; common $=12\%,$ for a company in the $25\%$ tax bracket.

A$.10\mathrm{.}4\%$

B$.9\mathrm{.}7\%$

C$.8\mathrm{.}5\%$

D$.$ it depends

Based on the information in the previous question, if this company were to invest in a project with a $0$ NPV$,$ what rate of return would the stockholders expect to earn? SHOW THE WORK FOR THIS QUESTION

A$.$ zero

B$.12\%$

C$.$ the IRR

D$.$ the cost of capital