AFP Certified Treasury Professional CTP Question # 403 Topic 18 Discussion

AFP Certified Treasury Professional CTP Question # 403 Topic 18 Discussion

CTP Exam Topic 18 Question 403 Discussion:
Question #: 403
Topic #: 18

A company is evaluating a project. What is the appropriate discount rate that it should use if its marginal tax rate is 34%, its capital structure is 40% common equity, and 60% debt. Its cost of equity is 10%, and its average cost of debt is 4%?


A.

5.04%


B.

5.30%


C.

5.58%


D.

6.40%


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