What is wacc for last dollar raised to complete expansion

Assignment Help Financial Management

Reference no: EM131524051

WACC Olsen Outfitters Inc. believes that its optimal capital structure consists of 65% common equity and 35% debt, and its tax rate is 40%. Olsen must raise additional capital to fund its upcoming expansion. The firm will have $4 million of retained earnings with a cost of rs = 14%. New common stock in an amount up to $8 million would have a cost of re = 16%. Furthermore, Olsen can raise up to $4 million of debt at an interest rate of rd = 11%, and an additional $5 million of debt at rd = 14%. The CFO estimates that a proposed expansion would require an investment of $9.6 million. What is the WACC for the last dollar raised to complete the expansion? Round your answer to two decimal places. %

Reference no: EM131524051

Questions Cloud

Identify how various health care stakeholders define quality : Analyze the purpose of quality management in the health care industry. Identify how various health care stakeholders define quality.

Company uses only debt and common equity : Empire Electric Company (EEC) uses only debt and common equity. What is its cost of common equity? Which projects should Empire accept?

Do the data represent good news or bad news : Peter Finch looked at the numbers for the renewals of subscriptions to Decision Analysis Monthly magazine.

Create a four-part training manual : Create a four-part training manual that introduces the purpose of a QI plan and its components for new staff members.

What is wacc for last dollar raised to complete expansion : What is the WACC for the last dollar raised to complete the expansion?

Explain data needed to monitor improvements : Explain data needed to monitor improvements.Explain at least three data collection tools you can use to collect performance information.

Annual compound rate of growth in the price of apples : In April 2013 a pound of apples cost $1.49, while oranges cost $1.13. What was the annual compound rate of growth in the price of apples?

Review case of screening for colorectal cancer : The fecal occult blood test, widely used both in physicians' offices and at home to screen patients for colon and rectal cancer.

How much energy is stored by the capacitor : How much energy is stored by the capacitor? What is the charge on the capacitor? What is the average current through the flash tube?

User Account

All Pages