TheSunlandCompany has an after-tax cost of debt capital of4percent, a cost of preferred stock of7percent, a cost of equity capital of10percent, and a weighted average cost of capital of6percent.Sunlandintends to maintain its current capital structure as it raises additional capital. In making its capital-budgeting decisions for the average-risk project, the relevant cost of capital is:

10percent.

6percent.

4percent.

7percent