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 appropelate discount rate only for a project of average risk. Consider the case of Turnbuil Company: Turmbuli Company has a target capital structure of 45% debt, 4% preferred stock, and 51% common equity. It has a before-tax cost of debt of 8.20%, and its cost of preferred stock is 9.30%. If Tumbuli can raise all of its equity capital from retained earnings, its cost of common equity will be 12.40%. However, if it is necessacy to raise new common equity, it will carry a cost of 14,20%. If its current tax rate is 40%, Turnbull's weighted average cost of captal (WACC) will be higher it it has to raise additional common equity eapital by issuing new common stock instead of raising the funds through retained earnings. Turnbull Company is considering a ptoject that requires an inital investment of $570,000.00. The firm will raise the $570,000.00 in capital by issuing $230,000.00 of debt at a before-tax cost of 10.20%,$20,000.00 of preferred stock at a cost of 11.40%, and $320,000.00 of equity at a cost of 14.30%. The form faces o tax rate of 40%. The WACC for this project is