Reference no: EM132443166

Brachman Builders is a large international construction firm that wants to raise up to $60 million to finance expansion. Brachman desires to maintain a capital structure that is 50% debt and 50% equity. Brachman can finance in the domestic and international markets at the rates listed in the following table. Both debt and equity would have to be sold in multiples of $15 million, and these cost figures show the component costs, each, of debt and equity if raised half by equity and half by debt. Up to $30 million of new capital Cost of Domesic Equity 10% Cost of Domesic Debt 8% Cost of European Equity 12% Cost European Debt 6% $31 million to $60 of new capital Cost of Domesic Equity 16% Cost of Domesic Debt 10% Cost of European Equity14% Cost European Debt 8% What is the lowest possible average cost of capital for Brachman if the firm raises $30 million, maintains their desired capital structure and they are in a 30% tax bracket?