What is appropriate cost of capital use in analyzing project

Reference no: EM13201820

Statements Firm will finance a proposed investment by issuing new securities while maintaining its optimal capital structure of 60% debt and 40% equity.

The firm can issue bonds at price of $950.00 before $15 flotation costs.

The 10-year bonds will have an annual coupon rate of 8% and face value of $1,000.

The company can issue new equity at a before-tax cost of 16% and its marginal tax rate at 34%.

What is the appropriate cost of capital use in analyzing this project?

Reference no: EM13201820

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