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Rambo Exterminator Company bought a Bug Eradicator in April of 2008 that provided a return of 7 percent. It was financed by debt costing 6

Rambo Exterminator Company bought a Bug Eradicator in April of 2008 that provided a return of 7 percent. It was financed by debt costing 6 percent. In August, Mr. Rambo came up with an entire bug colony destroying device that had a return of 12n percent. The chief financial officer, Mr. Roach, told him it was impractical because it would require the issuance of common stock at a cost of 13.5 percent to finance the purchase, is the company following a logical approach to musing its cost of capital

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