Question: Company C Has 14 Million Shares Of Common Stock Outstanding, 900,000 Shares Of 9 Percent Preferred Stock Outstanding And 220,000 Ten Percent Semiannual Bonds Outstanding, Par Value $1,000 Each. The Common Stock Currently Sells For $42 Per Share And Has A Beta Of 1.15, The Preferred Stock Currently Sells For $80 Per Share, And The Bonds Have 17 Years …

Company C has 14 million shares of common stock outstanding,900,000 shares of 9 percent preferred stock outstanding and 220,000ten percent semiannual bonds outstanding, par value $1,000 each.The common stock currently sells for $42 per share and has a betaof 1.15, the preferred stock currently sells for $80 per share, andthe bonds have 17 years to maturity and sell for 91 percent of par.The market risk premium is 11.5 percent, T-bills are yielding 7.5percent, and the firm’s tax rate is 32 percent. Whatdiscount rate should the firm apply to a new project’s cash flowsif the project has the same risk as the firm’s typicalproject?