Source 5 6 20 21 22 23 24 A 1 2 Debt 3 Preferred 4 Common Totals 7 8 Tax Rate 9 Coupon Rate 10 Face Value S B Price Additional Bond Data 904.53 100.00 70.00 Dividend 0 Growth Rate Flotation Cost 11 Maturity 12 Flotation Cost 13 14 Additional Preferred Data 15 Dividend $ 10.00 16 Flotation Cost 5% 17 18 19 40% 10% S 1,000.00 10 3% Additional Common Data S 3.96 6% 6% C Units 400 1,000 10,000 $ S D Total Market Value 361,812 100,000 700,000 1,161,812 E % of Total 31.14% 8.61% 60.25% 100.00% F Marginal After Tax Cot 7.31 G H I J K L 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

The wacc calculated on the previous tab is good as long as no new financlng is required, however it a firm does not hove encugh capital it mint issue more. This then tequiles the calculation of the marginal Whec that isducter flotiation covs. bond isveus wet must factor in flotarion casts. Ving the ingormation to the left to calcutate the inarinal WACC. The wacc calculated on the previous tab is good as long as no new financlng is required, however it a firm does not hove encugh capital it mint issue more. This then tequiles the calculation of the marginal Whec that isducter flotiation covs. bond isveus wet must factor in flotarion casts. Ving the ingormation to the left to calcutate the inarinal WACC