1. Stackhouse Industries has a new project, which it plans to finance with a debt-to-value ratio of 0.30. (Assume beta of debt = 0.) The companies with operations comparable to this project have unlevered betas of 1.05, 1.10, and 1.30. The risk free rate is 3.8 percent, and the market risk premium is 7 percent. The company has a tax rate of 34 percent. What is the cost of equity that should be used in calculating the discount rate for the project?

   	A.	11.85%
   	B.	10.8%
   	C.	12.8%
   	D.	14.13%