A company is considering taking a new project that costs $250,000. The expected return is 13.5%. .
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A company is considering taking a new project that costs $250,000. The expected return is 13.5%. . The company has no enough compital for the new project. How would you recommend going about getting the additional funds? Use the Current WACC in your analysis.
The following information was collected on the company.
Before Tax Cost of debt6.5%
Tax Rate40%
Total Long Term Debt$400,000
Cost of Preffered Stock7.25%
Total Preferred Stock$50,000
Cost of Common Stock11%
Total Common Stock$500,000
Finance Utilized$850,000
Discuss how the current WACC will change based on the type of financing chosen.
Related Book For
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
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