Estimate of the projects cost of capital is closest to

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Question: Canyon Buff Corp. is planning to invest in a new medicine for diabetes. XBiotech Inc is a firm that specializes in this business. XBiotech has a stock price of $25 per share with 16 million shares outstanding. XBiotech's equity beta is 1.18. It also has $220 million in debt outstanding with a debt beta of 0.08. Suppose your firm's project is all-equity financed, if the risk-free rate is 2%, and the market risk premium is 6%, then your estimate of the project's cost of capital is closest to:

Reference no: EM133633042

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