A. Olsen Outfitters Inc. believes that its optimal capital structure consists of 65% common equity and 35% debt, and its tax rate is 25%. Olsen must raise additional capital to fund its upcoming expansion. The firm will have $2 million of retained earnings with a cost of r_s = 12%. New common stock in an amount up to $8 million would have a cost of r_e = 14.5%. Furthermore, Olsen can raise up to $4 million of debt at an interest rate of r_d = 10% and an additional $6 million of debt at r_d = 11%. The CFO estimates that a proposed expansion would require an investment of $7.0 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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B. Olsen Outfitters Inc structure consists solely of debt and common equity. It can issue debt at r_d = 11%, and its common stock currently pays a $2.75 dividend per share (D₀ = $2.75). The stock's price is currently $22.00, its dividend is expected to grow at a constant rate of 4% per year, its tax rate is 25%, and its WACC is 14.70%. What percentage of the company's capital structure consists of debt? Do not round intermediate calculations. Round your answer to two decimal places.

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