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6. Problem 10.10 (WACC and Percentage of Debt Financing) ebook Olsen Outfitters Inc believes that its optimal capital structure consists of a common equity and
6. Problem 10.10 (WACC and Percentage of Debt Financing) ebook Olsen Outfitters Inc believes that its optimal capital structure consists of a common equity and 45% debt, and its tax rate is 40%. Olsen must raise additional capital to fund its upcoming expansion. The firm will have $2 million of retained earnings with a cost of t. -12%. New common stock in an amount up to $9 million would have a cost of ro - 13.5% Furthermore, Olsen can raise up to $4 million of debt at an interest rate of ra -11% and an additional $5 million of debt atre -12. The CFO estimates that a proponed expansion would require an investment of $5.2 million. What is the WACC for the last dollar raised to complete the expansion Round your answer to two decimal places
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