A firm has $$88$ billion in equity, $$81$ billion in debt, and a tax rate of $21\%.$ The pre$-$tax cost of debt and equity are $1\mathrm{.}7\%.$ and $9\mathrm{.}8\%.,$ respectively. What discount rate should it use for a typical project?

A firm has $$88$ billion in equity, $$81$ billion in debt, and a tax rate of $21\%.$ The pre$-$tax cost of debt and equity are $1\mathrm{.}7\%.$ and $9\mathrm{.}8\%.,$ respectively. What discount rate should it use for a typical project?

$5\mathrm{.}06\%$

$4\mathrm{.}85\%$

$4\mathrm{.}60\%$

$5\mathrm{.}75\%$