Answer:
The weighted cost of capital for the project which is also the project discount rate is 10.12%
Explanation:
WACC=Ke*E/V+Kd*D/V*(1-t)+Kp*P/V
Ke is the cost of equity of 13.2%
Kd is the cost of debt of 8.7%
Kp is the cost of preferred stock of 9.9%
E is the market value of equity raised of $880,000
D is the market value of debt issued of $750,000
P is the amount of preferred stock sold to investors of $78,000
V is the sum of the market values above=$880,000+$750,000+$78,000=$1708000
WACC=(13.2%*880,000/1708,000)+(8.7%*750,000/1708,000*(1-0.25))+(9.9%*78,000/1708000)=10.12%
