Killer Burgers’ capital structure consists of 20 percent debt, 30 percent preferred stock, and 50 percent common stock. If Killer raises new capital, its after-tax cost of debt will be 3.5 percent, its cost of preferred stock will be 6 percent, its cost of retained earnings will be 10.2 percent, and its cost of new common equity will be 12.4 percent. If Killer needs to raise $220,000 and it expects to generate $100,000 in retained earnings this year.
What is the marginal cost of capital to raise the needed funds? Get Finance Help Today
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