ATT Corporation is consider a stand-alone satellite project that will require an investment of $ 1 billion. ATT has a debt ratio of 20% and a cost of debt of 7%, but it will borrow 50% of the capital needed for the satellite project at a rate of 8%; this debt will be borne by the satellite division with no recourse against the parent company. LT & T has a beta of 0.9, but the unlevered beta for satellite firms is 1.2. If the tax rate is 40%, estimate the cost of capital for the satellite division. (The riskfree rate is 6% and the market risk premium is 5.5%)