Quick-Link has debt outstanding with a market value of $200 million, and

equity outstanding with a market value of $800 million. Quick-Link is in the 34%

tax bracket, and its debt is considered risk free. Merrill Lynch has provided an

equity beta of 1.50. Given a risk-free rate of 3% and an expected market return of

12%, calculate the discount rate for a scale enhancing project in the hypothetical

case that Quick-Link is all equity financed.

A) 1.29 and 14.61%

B) 1.52 and 14.61%

C) 1.49 and 16.61%

D) 2.29 and 15.67%

E) None of the above.