Options for B are: 12.17%, 10.51%, 11.06%, and 8.85%
Options for C are: 11.26%, 9.79%, 9.30%, 10.77%
Tumbuli Co. has a target capital structure of 45% debt, 4% preferred stock, and 51% common equity, It has a before-tax cost of debt of 11.1%, and its cost of preferred stock is 12.2%. If Tumbull can raise all of its equity capital from retained earnings, its cost of common equity will be 14,7%. However, if it is necessary to raise new common equity, it will carry a cost of 16.8%. If its current tax rate is 40%, how much higher will Tumbuli's weighted average cost of capital (WACC) be if it has to raise additional common equity capital by Issuing new common stock instead of ralsing the funds through retained earnings? (Note: Round your intermediate calculations to two decimal placesi) Turnbull Co. is considering a project that requires an initial investment of $1,708,000. The firm will raise the $1,708,000 in capital by issulng $750,000 of debt at a before-tax cost of 11,1%,$78,000 of preferred stock at a cost of 12.2%, and $880,000 of equity at a cost of 14.7%. 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 noncaliable bonds outstanding that mature in 15 years with a face value of $1,000, an annual coupon rate of 11%, and a market price of $1555.38. 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 $9 at a price of $92.25 per share. Kuhn does not have any retained earnings avalable to finance this project, so the firm wili have to issue new common stock to help fund it. Its common stock is currently seliing 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 3 of the funds ralsed by issuing new common stock. The company is projected to grow at a constant rate of 9.2%, and they face a tax rate of 40%. What will be the WACC for this project? (Note: Pound your intermediate calculations to two decimal piacesi.)