Evenflow Power Co. is considering a new project that is a little riskier than the current operations of the company. Thus, management has decided to add an additional 1.5% to the company's overall cost of capital when evaluating this project. The company has 250,000 shares of common stock outstanding, 15,000 shares of preferred stock outstanding, and 8,000 20-year, semi-annual bonds outstanding with a 6% coupon. The common stock currently sells for $60 per share and has a beta of 1.05 . The annual dividend of the preferred stock is $5 , paid once a year. The preferred stock was originally issued at $90 per share, and currently sells for $80 per share. The bonds is currently sold at par value $1,000 each. The current market risk premium is 8% , 1-month government bonds are yielding 3.25%,10 -year government bonds are rielding 4.5% , and the firm's tax rate is 35% .

What discount rate should the firm apply to this new project?