Question: A project will be financed with 30% debt at a rate of 9% and the rest with a share issue. The starting price of the

A project will be financed with 30% debt at a rate of 9% and the rest with a share issue. The starting price of the stock will be $20 and it is expected to pay a dividend of $3 the following year and that dividend will grow at 4% per year. If the tax rate is 40%, what is the cost of capital for the project? a. 9.32% b. 9.60% c. 16.00% d. 14.92%

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