Question: Firm A has the following data: Target capital structure of 46% debt, 3% preferred, and 51% common equity; Tax rate = 40%; rd = 7%;

Firm A has the following data: Target capital structure of 46% debt, 3% preferred, and 51% common equity; Tax rate = 40%; rd = 7%; rp = 7.5%; rs = 11.5%; and re = 12.5%. What is the firm's WACC if it does not issue any new stock?

What is Firm A's WACC if it issues new common stock?

Firm A has 11 equally risky capital budgeting projects, each costing $19.608 million and each having an expected rate of return of 8.25%. Firm A's retained earnings breakpoint is $196.08 million. How much capital should Firm A raise and invest? Why?

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