Use the Information for the Question(s) Below

Multiple Choice

Use the information for the question(s) below.
Consider a project with free cash flows in one year of $90,000 in a weak economy or $117,000 in a strong economy, with each outcome being equally likely. The initial investment required for the project is $80,000, and the project's cost of capital is 15%. The risk-free interest rate is 5%.
-Suppose that you borrow only $30,000 in financing the project.According to MM Proposition II,the firm's equity cost of capital will be closest to:

A) 21%
B) 15%
C) 20%
D) 25%