please solve q.12 and identify the maximum amount of funds white can acquire. should the maximum amount be the size of the three block or just the horizontal length?

EDIATE 15 percent, and the cost of new equity (external) is 16 percent. Colbyco anticipates having $ 20 million of new retained earnings available over the coming year. Colbyco can sell $15 million of first-mortgage bonds with an after-tax cost of 9 percent. Its investment bankers feel the company could sell $10 million of debentures with a 9.5 percent after-tax cost. Additional debt would cost 10 percent after tax and be in the form of subordinated debentures. The after-tax cost of preferred stock financing is estimated to be 14 percent. Compute the marginal cost of capital schedule for Colbyco, and determine the break points in the schedule. 12. The White Corporation makes small Bozo replicas for sale in the growing Austin market. The firm's capital structure consists of 60 percent common equity, 10 per- cent preferred stock, and 30 percent long-term debt. This capital structure is believed to be optimal. White is planning to raise funds over the coming year to finance expansion plans. The firm expects to have ($40 million of retained earnings available. The cost of retained earnings is 18 percent. Additional common equity can be obtained by selling new common stock at a cost of 19.6 percent. The firm can sell a maximum amount of $20 million of preferred stock at a cost of 15 percent. First- mortgage bonds totaling $25 million can be sold at a pretax cost of 14 percent. Beyond $25 million, the firm would have to sell debentures at a pretax cost of 15 percent. The firm's marginal tax rate is 40 percent. Identify the size of each block of funds and the cost of the funds in each block, Be sure to identify the maximum amount of funds White can acquire. 13. Owens Enterprises is in the process of determining its capital budget for the next fiscal year. The firm's current capital structure, which it considers to be optimal, is contained in the following balance sheet: Balance Sheet Current assets $ 40,000,000 Accounts payable $ 20,000,000 Fixed assets 400,000,000 Other current liabilities 10,000,000 Total assets $440,000,000 Long-term debt 123,000,000 Common stock at par 15,500,000 Paid in capital in excess of par 51,000,000 LLENGE