Solution-Cost of capital will it incur to raise the needed

Cost of capital will it incur to raise the needed funds

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Reference no: EM131721481

Futuristic Coiffures (FC) needs to raise $85,000 to purchase a new machine. FC knows its component costs of capital are rd=5% , rps=7% , rs=11% , and re=13% . FC maintains a capital structure that consists of 60 percent debt, 10 percent preferred stock, and 30 percent common equity. The firm's marginal tax rate is 30 percent. If FC expects to generate $27,000 in retained earnings this year, what marginal cost of capital will it incur to raise the needed funds?

Reference no: EM131721481

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Cost of capital will it incur to raise the needed funds

Reference no: EM131721481

Reference no: EM131721481

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