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5. Solving for the WACC The WACC is used as the drecount rate to evaluate various capital budgeting projects. However, it is important to realise that the wNCc is an appropriate discount rate only for a project of averape risk. Analyze the cost of capital situatons of the following company cases, and answer the specific questions that finance professonals need to address. Consider the case of Turnbull Co. Tumbull Co, has a target capital structure of 58% debt, 6 \% prefeted stock, and 36% common equity. It hat a before tax cont of debt of 11 . tes, and its cost of preferred stock is 12.2. If Tumbull can raise all of its equity capital from retained earnings, its cost of common equity will be 14.7%. However, if it is necessary to raise new cornmon equity, it will carry a cost of 16.8%. If its current tax rate is 40%, how much higher will Turnbuli's weighted average cost of capital (WAcC) be if it has to rase additional common equity Capital by issuing new commoh stock instead of raising the funds through retained earnings? (Note: Round your intermediate calculations to two decimal places:) Tumbull Co. is considening a project that requires an initial investment of $1,708,000. The firm will raise the $1,708,000 in capital by issuing 5750,000 of debt at a before tax cost of 8.7%,578,000 of preferred stock at a cost of 9.994, and 5880,000 of equity at a cost of 13.245. The firm faces a tax rate of 40%. What will be the WACC for this project? (Note: Round your intermediate calrulations to three decamal places) Consider the case of Kuhn Co. Kuhin Co, is considering a new project that will require an initial investment of $45million. It has a target capical structure of 45% dets, 4% preferred stock, and 51% common equity. Kuhn has noncallable bonds outstanding that mature in five years with a face value of 51 , ooo, an anual coopon rate of 10%, and a market price of 51,050.76. The yield on the company's current bonds is a good appreximation of the yeld on any new bonds that it issues. The company can sell shares of preferred stock that pay an aniual dividend of 59 at a price of 595.70 per share. Kohn does not have any retained earnings avalable to finance this project, so the firm will have to issue new coenmon stock to help fund it. Tts common stock is currently selling for $22.35 per share, and it is expected to pay a dividend of 51.36 at the end of peet year. Focason conts will represent 8% of the funds raised by issuing new common stock. The company is projected to grow at a constant rate of 9.2% and they face a tax rate of 40%. What will be the wacc for this project? (Note: Round your intermedate calculations to two decirmal places)