Turnbull Co . has a target capital structure of 4 5 % debt, 4 % preferred stock,
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Question:
Turnbull Co has a target capital structure of debt, preferred stock, and common equity. It has a beforetax cost of debt of and its cost of preferred stock is
If Turnbull can raise all of its equity capital from retained earnings, its cost of common equity will be However, if it is necessary to raise new common equity, it will carry a cost of
If its current tax rate is how much higher will Turnbulls weighted average cost of capital WACC be if it has to raise additional common equity capital by issuing new common stock instead of raising the funds through retained earnings? Note: Round your intermediate calculations to two decimal places.
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