The weighted average cost of capital (WACC) is used as the discount rate to evaluate various capital budgeting projects However, it is important to realize that the WACC is an appropriate dacount rate only for a project of average risk Consider the umbut Company Tumbul Campany has a target capital structure of sa debt, 6% preferred stock, and 36% common equity it has a before-tax 11.10%, and its cost of preferred stock is 12.20%. f Tumbullo equity capital from retared samegs, ts cat debt of equity will be 14,70%. However, it is necessary to raise new cemmen equity, it will carry a cost of 16.60% its curre 40%, Turnbul's weighted average cost of capital (WACC) will be higher if it hes to raise additional comman equity capital by sing ammen stock instead of raising the funds through retained samnings Tumbut Company ang $750,000.00 13.50% The rm faces considering a project that requires an initial investment of $1,708,000.00. The firm will raise the $1,706,000.00 in capital by efere-tax cost of 9.60%, $78,000.00 of preferred stock at a cost of 10.70%, and $880,000.00 of equity at a cost of 40% The WACC for this project