Possible answers:

Q1: A. 11.0% B. 10.8% C. 10.6% D. 11.4%

Q2: A. 11.0% and 11.4% or B. $60M and $134M

Q3: A. Mcneill Corp B. Turner Corp C. Edwards Corp

Use the MCC schedule to complete the sentences that follovw Tool tip: Mouse over the points on the graph to see their coordinates. Percent 12 WACC 1 1.4% WACC = 11.0% WACC = 10.6% 10 0 20 40 60 80 100 120 140 160 Dollars of new pital raised If this company raises $40M, its weighted average cost of capital is The breakpoints in the MCC schedule ocour at of newly raised capital. Use the cost of capital schedules to select which firm is presented in the MOCschedule. McNeil Corporation Cost of Capital Schedule Breakdown of funds: if if 160M is raised After-Tax Cponent Cost, r 6.5% 11.0% 13.0% if$60M is raised 34M is raised After-Tax After-Tax Weight 0.45 0.05 Amount Component Cost, r Amount Component Cost, r Amount Capital source Debt Preferred stock Common equity 27.0 6.0% 11.0% 11.5% $60.3 6.5% 11.0% 12.0% $72.0 134.0 $160.0 Turner Corporation Cost of Capital Schedule Breakdown of funds: if if 160M is raised After-Tax Cponent Cost, r 6.5% 11.0% 15.85% if$60M is raised 34M is raised After-Tax After-Tax Weight 0.45 0.05 Amount Component Cost, r Amount Component Cost, r Amount Capital source Debt Preferred stock Common equity 27.0 6.0% 11.0% 14.7% 6.3% 11.0% 15.23% $72.0 134.0 $160.0 Edwards Corporation Cost of Capital Schedule Breakdown of funds: if$60M is raised if 34M is raised if 160M is raised After-Tax After-Tax After-Tax Capital source Debt Preferred stock Common equity Total capital Weight 0.45 0.05 Amount Component Cost, r Amount Component Cost, r Amount Cponent Cost, r 7.0% 10.0% 18.7% 27.0 6.0% 10.0% 15.6% $60.3 70% 10.0% 16.7% $72.0 134.0 $160.0