Suppose you have just analyzed a project using the cost of capital for your company, assume $\backslash (10\backslash \%\backslash ).$ After further analysis you estimate the asset beta for the project is $\mathrm{.}7$ when the risk free rate is $\backslash (2\backslash \%\backslash )$ and the expected return on the market is $\backslash (12\backslash \%\backslash ),$ you should:

adjust the cost of capital for the project to $\backslash (12\backslash \%\backslash )$

leave the cost of capital alone, it is $\backslash (10\backslash \%\backslash )$

adjust the cost of capital for the project to $\backslash (9\backslash \%\backslash )$

it depends