The company has a target debt-equity ratio of 0.8, a cost of equity of 14.0%, a cost of debt of 8.0%, and is subject to a 30% corporate tax rate. The company has never built and operated a refining plant in the past, preferring to sell the mined materials to other companies for treatment and ultimate sale. Consequently, it regards this project as requiring an increase in the firms cost of capital of +2%

a) Calculate the appropriate cost of capital that the company should apply to this project?