Calculating flotation costs-taxes and wacc

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Reference no: EM132034976

1. Taxes and WACC

Einstein Engineering has a target debt-equity ratio of 0.90. Its cost of equity is 14.00% and its cost of debt is 6.50%. If the tax rate is 30.00%, what is Einstein’s WACC?

WACC: _______________ %

2. Calculating Flotation Costs

Kalahari Conglomerate company needs to raise $55,000,000 to start a new project and will raise the money by selling new bonds. The company has a target capital structure of 65.00% common stock, 5.00% preferred stock, and 30.00% debt. Flotation costs for issuing new common stock are 10.00%, for new preferred stock, 10.00%, and for new debt, 7.00%. What is the true initial cost figure Kalahari should use when evaluating its project?

Cost of Project Including Flotation Costs: $ ________________

Reference no: EM132034976

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