Monica is the CFO of Cooking for Friends (CFF) and uses the pecking order hypothesis philosophy when she raises capital for company projects.
Currently, she can borrow up to $600,000 from her bank at a rate of 8.5%, float a bond for $1,100,000 at a rate of 9.25%, or issue additional
stock for $1,300,000 at a cost of 17%. What is the WACC for CFF if Monica chooses to invest a. $1,000,000 in new projects? b. $2,000,000 in
new projects? c. $3,000,000 in new projects?
Show work please.