Your firm is in the process of determining its capital budget for the next fiscal year....

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Your firm is in the process of determining its capital budget for the next fiscal year. The firm's current capital structure, which it considers to be optimal, is contained in the following balance sheet: Current assets $110 Accounts payable Fixed assets 260 Other current liabilities $ 30 20 Total assets $370 Long-term debt 128 Preferred stock Common stock (20 million shares at par) 8882 32 20 Contributed capital in excess of par 30 Retained earnings 110 Total liabilities and equity $370 Discussions between the firm's financial officers and the firm's investment and commercial bankers have yielded the following information: The firm can borrow $40 million from its bank at a pretax cost of 13 percent. . The firm can borrow $80 million by issuing bonds at a net price of $687 per bond. The bonds would carry a 10 percent coupon rate and mature in 20 years. The par value is $1,000. . Additional debt can be issued at a 16 percent pretax cost. Preferred stock can be issued at a cost of 16.5 percent. The firm expects to generate $140 million in net income and pay $2 per share in dividends. The $2-per-share dividend (D1) represents a growth of 5.5 percent over the previous year's dividend. This growth rate is expected to continue for the foreseeable future. The firm's stock currently is trading at $16 per share. The firm can raise external equity by selling common stock at a net price of $15 per share. . The firm's marginal tax rate is 40 percent. What is the WMCC for this third increment? Your firm is in the process of determining its capital budget for the next fiscal year. The firm's current capital structure, which it considers to be optimal, is contained in the following balance sheet: Current assets $110 Accounts payable Fixed assets 260 Other current liabilities $ 30 20 Total assets $370 Long-term debt 128 Preferred stock Common stock (20 million shares at par) 8882 32 20 Contributed capital in excess of par 30 Retained earnings 110 Total liabilities and equity $370 Discussions between the firm's financial officers and the firm's investment and commercial bankers have yielded the following information: The firm can borrow $40 million from its bank at a pretax cost of 13 percent. . The firm can borrow $80 million by issuing bonds at a net price of $687 per bond. The bonds would carry a 10 percent coupon rate and mature in 20 years. The par value is $1,000. . Additional debt can be issued at a 16 percent pretax cost. Preferred stock can be issued at a cost of 16.5 percent. The firm expects to generate $140 million in net income and pay $2 per share in dividends. The $2-per-share dividend (D1) represents a growth of 5.5 percent over the previous year's dividend. This growth rate is expected to continue for the foreseeable future. The firm's stock currently is trading at $16 per share. The firm can raise external equity by selling common stock at a net price of $15 per share. . The firm's marginal tax rate is 40 percent. What is the WMCC for this third increment?