The Monster Motors Co. invested an expansion project that costs $1 million and returns $500,000 each year

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Question:

The Monster Motors Co. invested an expansion project that costs $1 million and returns $500,000 each year for 7 years. The total debt ratio is 1/3. The cost of equity is 12%, the cost of debt is 6%, and the tax rate is 20%.

Calculate the cost of capital.