9.97 The WACC is used as the discount rate to evaluate various capital budgeting projects. Howevec, it is important to realize that the WACC is only an appropriate discount rate for a project of average risk-in other words, a project that has the same beta as the company. If a project has less risk than the overall company risk, it should be evaluated with a lower discount rate; if a project is riskier than the overall company risk, it should be evaluated using a discount rate higher than the company WACC: Analyze the coss of capital situations of the following company cases, and answer the specific questions that finance professionals need to address. Consider the case of Turnbull co. Turnbult Co. has a target capital structure of 58% debc, 6% preferred stock, and 36% cgmmon equity, It has a before-tax cout of debt of 11.1%, an its cost of preferred stock is 12.2%. If Tumbult can ralse all of its equity capical from retained earnings, its cors of common equity will be 14.7%. However, if it is necessary to raise neir common equity it will carry a cort of 16.8%. If its current tax rate ir 40%, how much higher will Tumbull's weighted average cost of captal (WACC) be if it has to raise additional common equity capitai by issuing new common rtock instend of raising the funds through reta red earnings? (Notel Do not round your intermediate calculations.) 0.84% 0.76% d.ent Turnbull C0 is considering a project that requires an initial investment of $1,708,000. The firm will ra ise the 51,708,000 in capital by is5uing $750,000 rate of 40%. What vall be the WACC for this project? (Note: Do not round intermediate calculations.) Consider the case of Kuhn Co. does not incur any flotasion costs when ismuing debt and preferced ntosk