Teknik Inc. is considering implementing the following projects next year. The target capital structure of the company is 40% debt and 60% equity. Within the equity items, there is an undistributed profit of 20 million and 6 million preferred shares. Additional funds required will be raised through the issuance of common shares.

The interest rate for the company's loan, up to 12 million, is 22%. If it exceeds this amount, the applicable interest rate is 25%. The cost of preferred shares is 28%. The current price of the company's common shares is 50 TL, and the latest distributed dividend is 8 TL. In the case of issuing new shares, it is anticipated that the share price will be 46 TL. Based on this information, determine which of the following projects can be implemented.

Additional information: Cost of preferred shares: 28%, growth rate: 6%, and corporate tax rate: 42%.

Answer rating: 100% (QA)

Lets start by calculating the cost of each component of the capital structure Cost of Debt The interest rate for the companys loan up to 12 million is ... View the full answer