F3 5 6 7 Q5 2 3 100% - 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 A 1 2 3 Preferred 4 Common Totals Source Debt Tax Rate Coupon Rate Face Value Maturity Flotation Cost Additional Bond Data $ Dividend Flotation Cost B Price 904.53 100.00 70.00 Dividend 0 Growth Rate Flotation Cost Additional Preferred Data $ 10.00 40% 10% $ 1,000.00 10 3% 5% Additional Common Data $ 3.96 6% 6% $ Units 0.00123 400 S 1,000 10,000 S Times... D Total Market Value 361,812 100,000 700,000 1,161,812 Y - 11 E % of Total HEL 31.14% 8.61% 60.25% 100.00% + BIG A F Marginal After Tax Cot 7.31 88 53 - G H EA : 1 TJ K L UNI The WACC calculated on the previous tab is good as long as no new financing is required, however if a firm does not have enough capital it must issue more. This then requires the calculation of the marginal WACC that includes flotation costs. For instance it does not matter the rate at which a bond was originally issued. However the WACC changes as we have to issue new forms of capital. As the text discusses with new stock or bond isseus we must factor in flotation costs. Using the information to the left to calculate the marginal WACC. M A N

The wace calculated on the previous tah is pood as lone as no new financing is required, howerver if WucC that inchades flotation ceits. For insence it does not natter the rate at which a bond Was oridinaly issute: Usirc the inlopratian to the ieft to calculase the maronal wace The wace calculated on the previous tah is pood as lone as no new financing is required, howerver if WucC that inchades flotation ceits. For insence it does not natter the rate at which a bond Was oridinaly issute: Usirc the inlopratian to the ieft to calculase the maronal wace