Ch 10: End-of-Chapter Problems - The Cost of Capital 0 X

Ch 10: End-of-chapter Problems - he Cost of Capital o Back to Assignment Attem pts; 10. Problem 10.10 Click here to read the eBook, WACC Keep the Highest; gaslc Oennltlons Olsen Outfitters Inc believes that its optimal capital structure consists of 70% common equity and debt, and its tax rate is Olsen must raise additional capital to fund its upcoming expansiom The firm will have $2 million of retained earnings with a cost of rs = 14%. New common stock in an amount up to $8 million would have a cost of Furthermore, Olsen can raise up to $2 million of debt at an interest rate of rd = 9% and an additional $4 million of debt at rd = 11%. The CFO estimates that a proposed expansion would require an investment of $6.4 million. What is the WACC for the last dollar raised to complete the expansion? Round your answer to two decimal places. Grade it Now Save & Continue Continue without saving