Silo Mills Is an All-Equity Financed Firm That Has a Beta

Multiple Choice

Silo Mills is an all-equity financed firm that has a beta of 1.18 and a cost of equity of 12.2 percent. The risk-free rate of return is 2.9 percent. The firm is currently considering a project that has a beta of 1.03 and a project life of six years. What discount rate should be assigned to this project?

A) 11.33 percent
B) 11.02 percent
C) 10.62 percent
D) 11.84 percent
E) 12.09 percent