Blackbird Company is evaluating a new project that has an initial cost of $1 million. If the project gets accepted, Blackbird plans to borrow $1 million from a local bank in order to finance this project.

The following information is available for Blackbird Company: Cost of Equity: 14% Cost of Debt: 7% WACC: 12% Which of the following statements is true regarding the required rate of return Blackbird should use when evaluating this project?

options: 1) Blackbird should use a required rate of 14% if this project is perceived to be less risky than the companys existing assets

2) Blackbird should use a required rate of 7% because this project will be fully financed by debt

3) Blackbird should use a required rate of 12% if this project is perceived to be as risky as the companys existing assets

4) All statements in other answer choices are true

5) Neither of the statements is true. Blackbird should use the NPV to evaluate this project.