KT Enterprises is considering investing in a new project. Based on a competitive analysis of companies with similar projects, KT has concluded that an average cost of an unleveraged company of 12 % would be appropriate for this project. The company's marginal tax rate is 35 % and the cost of debt is 7 %. KT estimates that the decision for a new project will have no impact on the cost of debt. 

If a company finances a new project with a debt-to-equity ratio of 1, then calculate  the average cost of capital (rWACC) for this project.

Answer rating: 100% (QA)

The weighted average cost of capital WACC is the average rate of return a company is expected to pay ... View the full answer