Question
ETM Corp. is evaluating a new project which has an unlevered beta of 1.1. The project will be financed with 40 percent debt with a
ETM Corp. is evaluating a new project which has an unlevered beta of 1.1. The project will be financed with 40 percent debt with a cost of 7 percent. The risk-free rate is 5 percent and the market risk premium is 8 percent. If ETM's tax rate is 30 percent, what is the project cost of capital?
- 10.2 percent
- 11.7 percent
- 12.7 percent
- 13.5 percent
- 17.9 percent
Answer is 12.7%. Could you please show me all the steps to get the answer
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Financial Management For Decision Makers
Authors: Peter Atrill, Paul Hurley
2nd Canadian Edition
138011605, 978-0138011604
