Klose Outfitters Inc. believes that its optimal capital stru

Assignment Help Finance Klose Outfitters Inc. believes that its optimal capital stru

Finance

Klose Outfitters Inc. believes that its optimal capital stru

Klose Outfitters Inc. believes that its optimal capital structure consists of 70% common equity and… Show more Klose Outfitters Inc. believes that its optimal capital structure consists of 70% common equity and 30% debt, and its tax rate is 40%. Klose must raise additional capital to fund its upcoming expansion. The firm will have $1 million of retained earnings with a cost of rs = 14%. New common stock in an amount up to $9 million would have a cost of re = 18%. Furthermore, Klose can raise up to $4 million of debt at an interest rate of rd = 11%, and an additional $4 million of debt at rd = 12%. The CFO estimates that a proposed expansion would require an investment of $6.8 million. What is the WACC for the last dollar raised to complete the expansion? • Show less

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