Weighted Average Cost of Capital Assignment | Homework For You
June 3rd, 2020
Question 10 (1 point) Klose Outfitters Inc. believes that its optimal capital structure consists of 70% common equity and 30% debt, and its tax rate is 35%. Klose must raise additional capital to fund its upcoming expansion. The firm will have $300,000 of retained earnings with a cost of 15%. New common stock in an amount up to $6 million would have a cost of 20%.
Furthermore, Klose can raise up to $250,000 of debt at an interest rate of 6% and an additional $6 million of debt at 8%. The CFO estimates that a proposed expansion would require an investment of $700,000. What is the WACC for the last dollar raised to complete the expansion? 09.50% 12.06% O 15.17% 11.67%. Get Finance homework help today
Furthermore, Klose can raise up to $250,000 of debt at an interest rate of 6% and an additional $6 million of debt at 8%. The CFO estimates that a proposed expansion would require an investment of $700,000. What is the WACC for the last dollar raised to complete the expansion? 09.50% 12.06% O 15.17% 11.67%. Get Finance homework help today
