What marginal cost of capital will it incur

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Problem - Futuristic Coiffures (FC) must 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: EM132698695

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