Answer:
b. 12.44%
Step-by-step explanation:
The Permian Underground Machines & Pipes Co. (PUMP) is considering to pursue a new oilfield services operation which will require an investment of $50 million. The company requires to borrow funds by issuance of bonds with 20 years of maturity. The moody's has assessed the company project to be risky and has rated it as Caa. The Caa rating is considered to be vulnerable and ability for the project to meet its financial obligations depends on its favorable business outcome and good economic conditions.