Debt-equity ratio-what is the project cost of capital

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Reference no: EM131354168

Lawler's is considering a new project. The company has a debt-equity ratio of .64. The company's cost of equity is 14.9 percent, and the aftertax cost of debt is 5.3 percent. The firm feels that the project is riskier than the company as a whole and that it should use an adjustment factor of +1.8 percent. What is the project cost of capital if the tax rate is 34 percent?

A. 12.53 percent

B. 12.98 percent

C. 12.95 percent

D. 15.14 percent

E. 15.68 percent

Reference no: EM131354168

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