Question: Suppose that TRM Consulting Services has discussed its need for capital with its investment bankers. The bankers have estimated that TRM can raise new funds

 Suppose that TRM Consulting Services has discussed its need for capital

Suppose that TRM Consulting Services has discussed its need for capital with its investment bankers. The bankers have estimated that TRM can raise new funds in the capital markets under the following conditions. A B D 1 Source Max Level Borrowed Funds After-tax Cost 2 Common Equity Up to 1,500,000 0 10.93% 3 1,500,001 to 4.000.000 1,500,001 11.26% 4 More than 4,000,000 4,000,001 11.85% 5 Preferred Equity Up to 200.000 0 4.86% 6 More than 200.000 200.001 6.25% 7 Debt Up to 1,000,000 0 4.33% 8 1000,001 to 2,000,000 1,000,001 4.86% 9 More than 2.000.000 2.000.001 5.12% If TRM wants to maintain the capital structure of 40% debt, 10% preferred stock and 50% common equity. Use the VLOOKUP function to find the corresponding cost of debt if the company raises $5,000,000 in total. Which of the following Excel formulas is correct? O =VLOOKUP(5000000. $C$2:$D$9.1. False) =VLOOKUP(5000000, $B$2:$D$9.2 True) =VLOOKUP(5000000-40%, $B$7:$D$9.2. True) =VLOOKUP(5000000-40%, $C$7:$D$9.2. True)

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