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I need help solving these two problems. Thank you! Turnbull Co. Is considering a project that requires an initial investment of $1,708,000, The firm wili
I need help solving these two problems. Thank you!
Turnbull Co. Is considering a project that requires an initial investment of $1,708,000, The firm wili raise the $1,708,000 in capital by issuing $750,000 of debt at a before-tax cost of 10.2%,$78,000 of preferred stock at a cost of 11.4%6, and $880,000 of equity at a cost of 14.3%. The firm faces a tax rate of 25%. What will be the WAcC for this project? places.) (Note: Round your intermediate calculations to three decimal Consider the case of Kuhn Co. Kuhn Co. is considering a new project that will require an initial investment of 54 million. It has a target capital structure of 35% debt; 2% preferred stock, and 635 common equity. Kuhn has noncallabie bonds outstanding that mature in five years with a foce value of 51,000 , an annual coupon rate of 10%6, and a market price of $1,050.76. The yield on the company's current bonds is a good approximation of the yield on any new bonds that it issues. The company can sell shares of preferred stock that pay an annual dividend of $9 at a price of $92.25 per share. Kuhn does not have any retained earnings avallable to finance this project, so the firm will have to issue new common stock to help fund it. its common stock is currently selling for $22,35 per share, and it is expected to pay a dividend of $2.78 at the end of neat year. Fiotation costs will represent 8% of the funds raised by issuing new common stock. The company is projected to grow at a constant rate of 8.7 . rate of 25\%. What will be the WACC for this project? (Note: Round vour intermediate calculations to two decimal plechs.) Step by Step Solution
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