Company C has $14$ million shares of common stock outstanding,

$900,000$ shares of $9$ percent preferred stock outstanding and $220,000$

ten percent semiannual bonds outstanding, par value $$1,000$ each.

The common stock currently sells for $$42$ per share and has a beta

of $1\mathrm{.}15,$ the preferred stock currently sells for $$80$ per share, and

the bonds have $17$ years to maturity and sell for $91$ percent of par.

The market risk premium is $11\mathrm{.}5$ percent, T$-$bills are yielding $7\mathrm{.}5$

percent, and the firm's tax rate is $32$ percent. What

discount rate should the firm apply to a new project's cash flows

if the project has the same risk as the firm's typical

project?