If its current tax rate is 40%, how much higher will Turbull's weighted average cost of capital (WACC) be if it has to raise additional common equity

capital by issuing new common stock instead of raising the funds through retained earnings? (Note: Round your intermediate calculations to two

decimal places.)

Turnbull Co. is considering a project that requires an initial investment of $570,000. The firm will raise the $570,000 in capital by issuing $230,000 of debt at a before-tax cost of 9.6%, $20,000 of preferred stock at a cost of 10.7%, and $320,000 of equity at a cost of 13.5%. The firm faces a tax rate of 40%. What will be the WACC for this project?

(Note: Round your intermediate calculations to three decimal places.)

Consider the case of Kuhn Co.

Kuhn Co. is considering a new project that will require an initial investment of $4 million. It has a target capital structure of 35% debt, 2% preferred

stock, and 63% common equity. Kuhn has noncallable bonds outstanding that mature in five years with a face value of $1,000, an annual coupon rte

of 10%, 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 $8 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 $33.35 per share, and it is expected to pay a dividend of $1.36 at the end of next year. Flotation 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%, and they face a tax

rate of 40%. What will be the WACC for this project?

(Note: Round your intermediate calculations to two decimal places.)

The WACC, is used as the discount rate to evaluate various capital budgeting projects, However, it is Important to realize that the WACC is an appropriate discount rate only for a project of average risk. Analyze the cost of capital situations of the following company cases, and answer the specific questions that finance professionals need to address. Conslder the case of Turnbull Co. Turnbuli Co, has a target capital structure of 58% debt, 6% preferred stock, and 36% common equity. It has a before-tax cost of debt of 8.2%, and its cost of preferied stock is 9.3\%. If Turnbuill can raise all of its equity capital from retained eamings, its cost of common equity will be 12 , 4%, However, if it is necessary to ralse new common equity, it will carry a cost of 14.2%. If its current tax rate is 40%, how much higher will Tumbuil's weighted average cost of capital (WACC) be if it has to raise additional common equity capital by issuing new common stock instead of raising the funds through retained earnings? (Note: Round your intermediate calculations to two decimal places.) 0.80% D.74\% 0,94% Q.6446 Turnbull Co. is considering a project that requires an initial investment of $570,000. Tha firm will rajse the $570,000 in capital by iesuing $230,000 of debt at a before-tax cost of 9,6%,320,000 of preferred stock at a cost of 10,746 and 3320,000 of equity at a cost of 13.5%. The firm faces a tax rate of 40 What will be the WACC for this project? (Note: Round your internediate calcilations to three decimal places.) Turnbuli Co. is considering a project that requires an initial investment of $570,000. The firm will raise the 5570,000 in cepital by issuing $230,000 of debt at a before-tax cost of 9.6%,$20,000 of preferred stock at a cost of 10.7%, and $320,000 of equity at a cost of 13.5%. The firm faces a tax rate of 40%. What will be the WACC for this project? (Note: Round your intermediate calculations to three decimal places.) Consider the case of Kuhn Co. Kuhn Co. is considering a new project that will require an initial investiment of 34 milion. It has a target capatal structure of 35% debt, 2w preferred stock, and 63% common equity. Kuhn has noncallable bonds outstanding that mature in five yearn with a face value of $1,000, an annual coupon rate of 10%, and a market price of $1,050,76. The yield on the company's current bonds is a good approximation of the yieid on any new bonds that it issues. The company can seil shares of preferred stock that pay an annual dividend of $8 at a prica of $92.25 per share. Kuhn does not have any retained earnings avaliable to finance this project, so the firm will have to issue new common stock to help fund it. Its common stock is currently seliling for 333.35 per shere, and it is expected to pay a dividend of $1.36 at the end of next year. Fotation 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 .7w, and they face a tax rate of 40%. What will be the wACC for this project? (Note: Round your intermediate calculations to two decimal places.)