1. Olsen Outfitters Inc. believes that its optimal capital structure consists of 55% common equity and 45% debt, and its tax rate is 40%. Olsen must raise additional capital to funds its upcoming expansion. The firm will have $4 million of retained earnings with a cost of r_s = 11%. New common stock in an amount up to $8 million would have a cost of r_e = 12.5%. Furthermore, Olsen can raise up to $4 million of debt at an interest rate of r_d = 9% and an additional $5 million of debt at r_d = 13%.
   1. The CFO estimates that a proposed expansion would require an investment of $7.0 million. What is the WACC for the last dollar raised to complete the expansion?
   2. If the firm needs to raise $8.2 million for its upcoming expansion, what is the WACC for the last dollar raised to complete the expansion?
   3. If the firm needs to raise $10.5 million for its upcoming expansion, what is the WACC for the last dollar raised to complete the expansion?