ABC Inc. is evaluating a project. The ABC intends to use 20% debt in funding the project.ABC identifies 5 comparable companies with the following "equity betas" and "debt/equity" ratios.While the comparable companies have varying marginal tax rates, ABC's marginal tax rate is 25%.

The current risk free rate prevailing in the market is 3% and the market return is estimated to be about 8.5%

Company

Equity Beta

D/E Ratio

Marginal Tax Rate

A

1.38

0.25

25%

B

1.65

0.55

30%

C

2.11

0.75

35%

D

1.54

0.50

30%

E

1.83

0.60

30%

ABC's cost ofequitycapital is closest to ____.

Group of answer choices

10.80%

15.52%

7.95%

11.10%

None of the above answers is correct