Energy Corp. has a market capitalization of $15 billion and debt with market value of $5 billion. Energy will keep its current Debt-to-Equity ratio constant. The equity cost of capital is rE = 10% and the cost of debt is rD = 6%. The corporate tax rate is 35%. Assume a market risk premium of 6% and a risky-free rate of 5%. The firm is considering an expansion project (i.e., same risk as the firms assets) with the following cash flows:

Year	0 1 2
Free Cash Flows ($M)	-100 70 120

Assume that the project is not an expansion project within Energys line of business (i.e., different risk). BigKup, a public firm, is believed to meet the requirements for a comparable firm. BigKup has an equity Beta of 1.5 and a debt-to-equity ratio of 1. BigKup can borrow at the risk free rate. What should the projects discount rate be if the project were financed with equity only? (A) 9.5% (B) 10.5% (C) 11.0% (D) 14.0%