What marginal cost of capital will it incur to raise

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Tiger inc. needs to raise $85,000 to purchase a new machine. Tiger knows its component costs of capital are debt 5%, preferred stock 7%, new equity 13%, and retained earnings 11%. Tiger 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 Tiger expects to generate $26,000 in retained earnings this year, what marginal cost of capital will it incur to raise the needed funds if needed?

Reference no: EM13950009

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