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Olsen outfitters inc believes that its optimal capital structure consists of 65% common equity and 35% debt, and its tax rate is 40%. Olsen must
Olsen outfitters inc believes that its optimal capital structure consists of 65% common equity and 35% debt, and its tax rate is 40%. Olsen must raise additional capital to fund its upcoming expansion. The firm will have $2 million of retained earnings with a cost of 13%. New common stock is An amount up to $6 million would have a cost of 14.5%. Furthermore, Olsen can raise up to $4 million of debt at an interest rate of 10% and an additional $3 million of debt of 13%. The CFO estimated that a proposed expansion would require an investment of 6.5 million. What is the wacc for the last dollar raised to complete the expansion?
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