6. Solving for the WACC The WACC is used as the discount rate to evaluate various capital budgeting profects. However, it is important to realize that the WaCC is an appropriate discount rate only for a project of average risk. Analyze the cost of capital situations of the following company cases, and answer the specfic questions that finance professionats need to addres. Consider the case of Turnbull Co. Turnbull Co, has a target capital structure of 58% debt, 6% preferred stock, and 36% common equity it has a before-tax cost of debt of 11,195 , a its cost of preferred stock is 12.2%. If Turnbull can raise all of its equity eapital from retained eamings, its cost of common equity will be 14.7\%s, However, if it is necessary to raise nen common equity, it will carry a cost of 16.8%. If its current tax rate is 25%, how much higher will Tumbull's weighted average cost of capital (wacc) be if it has to raise adcitional cammon equity capital by issuing new common stock instead of raising the funds through retained earnings? (Note: fle und your intermedlate calculations to two decimal places) 0.68% 0.87% 0.99% 0.76% Turnbuil Co. is considering a project that requires an initial investment of $1,708,000. The firm will raise the $1,708,000 in capital by issuing $750,00 of debt at a before-tax cost of 11.1%,578,000 of preferred stock at a cost of 12.2%, and $880,000 of cquity at a cost of 14,7%. The firm faces a tax rate of 25%. What will be the WACC for this project? (Note: found your intermediate calculations to three decimal places.) Consider the case of Kuhn Co. Kuhn Co. is considering a new project that will require an initial investment of $45 million. It has a target capital structure of 35% debt, 2% preferred stock, and 63%0 common equity. Kuhn has noncaliable bonds outstanding thot mature in five years with a face value of $1,000, an annual coupon rate of 10%, and a market price of $1,050.76. The yield on the company's current bonds is a good approximation of the yieid on any new bonds that it. 15stes. The company can sell shares of preferred stock that pay an annual dividend of $9 at a price of $95.70 per share. Kuhn does not have any retained earnings available to finance this project, so the firm will have to issue new common stock to help fund it. Its common stock is currently seling for $33.35 per share, and it is expected to pay a dividend of $1.36 at the end of next year. Flotation costs will represent 3% of the funds raised by issuing new common stocic. The company is projected to grow at a constant rate of 9.206, and they face a tax rate of 25%. What will be the WACC for this project