1. Cow boy Company has target capital structure of 60% common equity, 30%debt and 10%preferred stock. the cost of retained earnings is 15% the cost of new equity is 16%. The company anticipates having $20 million of new retained earnings available over the coming years. Cow Boy can sell $15 million of first mortgage bonds with after tax cost of 9%. Its investment bankers feel the company could sell $10 million of debentures with 9.5% after tax cost. Additional debt would cost 10% after tax and be in the form of subordinate debentures. The cost of financing is estimated to be 14%.

Required.

Prepare the MCC schedule for Cow Boy Company and determine the break points in the schedule.