Titan Mining Corporation has 10.4 million shares of common stock outstanding and 390,000 7.5 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $53 per share and has a beta of 1.20, and the bonds have 20 years to maturity and sell for 95 percent of par. The market risk premium is 7 percent, T-bills are yielding 5 percent, and Titan Mining’s tax rate is 35 percent.

If Titan Mining is evaluating a new investment project that has the same risk as the firm’s typical project, what rate should the firm use to discount the project’s cash flows?