As a company raises more and more funds, the cost of those funds begins to rise. Is this occurs, the weighted cost of each new dollar rises. is called the marginal cost of capital. A graph that shows how the weighted average cost of capitalchanges as more new capital is raised by firm is called the MCC (marginal cost of capital) schedule. Use the MCC schedule to complete the sentences that follow Tooltip: Mouse over the points on the graph to see their coordinates 0 20 40 100 100 120 140 160 Dollars of new capital raised If this company raises $20M, its weighted average cost of capital is The breakpoints in the MCC schedule occur at of newly raised capital Use the cost of capital schedules to select which firm is presented in the MCC schedule. Allen Corporation Cost of Capital Schedule Breakdown of funds: Capital source Debt Preferred stock Common equity Total capital Weight 0.45 9.05 0.50 Amount $27.0 33.0 $30.0 $60.0 if $60M is raised After Tax Component Cost 6.0% 10.0% 15.6% Amount $60.3 $6.7 $67.0 $134.0 $134M is raised After Tax Component Coster 7.0% 10.0% 16.7% Amount $72.0 $8.0 $80.0 $160.0 $160M is raised Afer Tax Component Cast, 7.0% 10.0% 18.7% Turner Corporation Cost of Capital Schedule Breakdown of funds: if $160M is raised Capital source Amount $60.3 if $60M is raised After Tax Component Cost 6.0% 11.0% 11.5% Weight 0.45 0.05 0.50 $134M is raised After Tax Component Cost 6.5% 11.04 12.0% Amount $27.0 $3.0 $30.0 $60.0 Debt Preferred stock Common equity Total capital After Tax Component Castr 6.5% 11.0% Amount $72.0 $8,0 $80.0 $160.0 $6.7 $67.0 $1340 13.0% White Corporation Cost of Capital Schedule Breakdown of funds: Capital source Debt Preferred stock Common equity Total capital Weight 0.45 0.05 0.50 Amount $27.0 $3.0 $30.0 $60.0 if $60M is raised After-Tax Component Cost, 6.0% 11.0% 14.7% Amount $60.3 $6.7 $67.0 $134.0 if $134M is raised After Tax Component Cost 6.3% 11.0% 15.23% Amount $72.0 58.0 $80.0 if $160M is raised After-Tax Component Cast, 6.5% 11.0% 15.85% $160.0