1F.4
4.McDonald's is thinking of opening up another restaurant in downtown Eugene. Its equity b is 1.1 and its debt b is 0.1. Equity represents 70% of its capital structure and debt represents 30%. If the risk-free return is 5% and the expected return on the market is 12%, what is the opportunity cost of capital that McDonald's should use for discounting the cashflows from this project? (8 pts)