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Klose Outfitters Inc. believes that its optimal capital structure consists of 70% common equity and 30% debt, and its tax rate is 35%. Klose must

Klose Outfitters Inc. believes that its optimal capital structure consists of 70% common equity and 30% debt, and its tax rate is 35%. Klose must raise additional capital to fund its upcoming expansion. The firm will have $300,000 of retained earnings with a cost of 15%. New common stock in an amount up to $6 million would have a cost of 20%. Furthermore, Klose can raise up to $250,000 of debt at an interest rate of 6%and an additional $6 million of debt at 8%. The CFO estimates that a proposed expansion would require an investment of $700,000. What is the WACC for the last dollar raised to complete the expansion?

Question 22 options:

12.06%

15.17%

9.50%

11.67%

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