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QUESTION 18 Following is information about Seasonal Products (SP) Corporation. The company has no preferred stock. Type of Capital Debt, rdT Common equity O e.
QUESTION 18 Following is information about Seasonal Products (SP) Corporation. The company has no preferred stock. Type of Capital Debt, rdT Common equity O e. 9.25% After-Tax Cost 6.5% Type of Capital Debt Equity Proportion of the Capital Structure 40.0% 60.0 Retained earnings, rs 12.0 New issue, re 15.0 The firm expects to retain $300,000 in earnings this year to invest in capital budgeting projects. If the SP's capital budget is expected to equal $550,000, what required rate of return, or marginal cost of capital, should be used when evaluating capital budgeting projects? a. 11.17% b. 9.80% c. 9.90% d. 11.60%
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