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Your firm is planning to invest in a dairy company. MilkFest is an all-equity firm that specializes in this business. Suppose MilkFests equity beta is

Your firm is planning to invest in a dairy company. MilkFest is an all-equity firm that specializes in this business. Suppose MilkFests equity beta is 0.85, the risk-free rate is 4%, and the market risk premium is 5%. If your firms project is all-equity financed, what is your cost of capital?

a. 9.00%

b. 8.05%

c. 8.40%

d. 8.50%

e. 8.15%

f. 8.75%

g. 9.25%

h. 8.25%

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