Project A B C You have the following projects to consider D Cost (Sthousands) $300 $4,200...

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Project A B C You have the following projects to consider D Cost (Sthousands) $300 $4,200 $6,300 $2,000 NPV 280 1775 1800 175 IRR 33% 14.2% 10.6% 9.6% Right now your debt rate is 6.3% and makes up 45% of the company capital structure with a tax rate of 30%. Equity is at 13.7% and makes up the rest of the capital structure. What will be the cost of capital for each project individually if you want to maintain the current capital structure, but the rates work as follows; we have $1.45 million in internal equity to use, if we go beyond that limit our equity rate goes to 15.1%. We can raise additional debt at the current rate up to $750 thousand. After that it goes to 6.7% and if we raise more than $2.5 million in debt it goes to 7.5%. Which projects should we do? Project A B C You have the following projects to consider D Cost (Sthousands) $300 $4,200 $6,300 $2,000 NPV 280 1775 1800 175 IRR 33% 14.2% 10.6% 9.6% Right now your debt rate is 6.3% and makes up 45% of the company capital structure with a tax rate of 30%. Equity is at 13.7% and makes up the rest of the capital structure. What will be the cost of capital for each project individually if you want to maintain the current capital structure, but the rates work as follows; we have $1.45 million in internal equity to use, if we go beyond that limit our equity rate goes to 15.1%. We can raise additional debt at the current rate up to $750 thousand. After that it goes to 6.7% and if we raise more than $2.5 million in debt it goes to 7.5%. Which projects should we do?

Answer rating: 100% (QA)

Please find the below table for the cost of capital with keeping the same capital structure Limitati... View the full answer