Interest rates on pre-tax risk-free investments are paying 4% per year. You estimate the general pre-tax risk premium for real estate is 4% over the risk-free rate and that the particular deal has an additional 2% pre-tax risk premium due to its type and location. What pre-tax discount rate should you use to calculate the PV of your portion of the equity returns?
a.10%
b.10.32%
c.12%
d.6%