Klose Outfitters Inc. believes that its optimal capital structure consists of 60% common equity and 40% debt, and its tax rate is 40%. Klose must raise additional capital to fund its upcoming expansion. The firm will have $ 2 million of new retained earnings with a cost of rs = 12%. New common stock in an amount up to $ 6 million would have a cost of re = 15%. Furthermore, Klose can raise up to $ 3 million of debt at an interest rate of rd ¼ 10% and an additional $ 4 million of debt at rd = 12%. The CFO estimates that a proposed expansion would require an investment of $ 5.9 million. What is the WACC for the last dollar raised to complete the expansion?
https://zactutor.com/wp-content/uploads/2021/03/logo-300x75.png 0 0 developer https://zactutor.com/wp-content/uploads/2021/03/logo-300x75.png developer2022-06-23 05:40:052022-06-23 05:40:05Klose Outfitters Inc Believes That Its Optimal Capital Structure Consists Of 60