Question: need help please Marginal Incorporated (MI) has determined that its before-tax cost of debt is 7.0%. Its cost of preferred stock is 14.0%. Its cost
Marginal Incorporated (MI) has determined that its before-tax cost of debt is 7.0%. Its cost of preferred stock is 14.0%. Its cost of internal equity is 16.0%, and its cost of external equity is 21.0%. Currently, the firm's capital structure has $621 million of debt, $45 million of preferred stock, and $234 million of common equity. The firm's marginal tax rate is 25%. The firm is currently making projections for the next period. Its managers have determined that the firm should have $99 million available from retained earnings for investment purposes next period. What is the firm's marginal cost of capital at a total investment level of $514 million? 9.13% 8.48% 9.78% 10.99% 9.69%
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
