Marginal Incorporated (MI) has determined that its after-tax cost of debt is 9.0%. Its cost of preferred stock is 13.0%. Its cost of internal equity is 18.0%, and its cost of external equity is 20.0%. Currently, the firm’s capital structure has $324 million of debt, $60 million of preferred stock, and $216 million of common equity. The firm’s marginal tax rate is 35%. The firm is currently making projections for the next period. Its managers have determined that the firm should have $82 million available from retained earnings for investment purposes next period. What is the firm’s marginal cost of capital at a total investment level of $278 million?
Marginal Incorporated (MI) has determined that its before-tax cost of debt is 7.0%. Its cost of preferred stock is 14.0%. Its cost of internal equity is 16.0%, and its cost of external equity is 21.0%. Currently, the firm’s capital structure has $621 million of debt, $45 million of preferred stock, and $234 million of common equity. The firm’s marginal tax rate is 25%. The firm is currently making projections for the next period. Its managers have determined that the firm should have $99 million available from retained earnings for investment purposes next period. What is the firm’s marginal cost of capital at a total investment level of $514 million?
Question 4 options:
e. 9.69%. Get Finance Help Today
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