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Show work and explain please for lifesaver... Crow Corporation is planning a $200 million expansion to be financed with debt, preferred stock and common stock.

Show work and explain please for lifesaver...

Crow Corporation is planning a $200 million expansion to be financed with debt, preferred stock and common stock. Their target capital structure includes 20% debt and 5% preferred stock.They have $30 million in retained earnings and will raise the rest of the funds by issuing common stock. They plan to raise funds to match the target capital structure.The tax rate is 40%.

Bonds: Crow Corporation has bonds with 6 years to maturity and a face value of $1000. The coupon rate is 7.8% and coupons are paid semiannually. The bonds trade at $990 per bond.

Preferred Stock: Crow issues preferred stock with a $2.85 dividend per year. They are sold to the market at $27 per share, but issue costs are $2 per share.

Retained Earnings: Crow uses the capital asset pricing model (CAPM) to estimate this. The firm has a beta of .95. The risk-free return is 4% and the market risk premium is 10%

Common Stock: Crow has a current dividend of $2.40. The payout rate is 60% and return on equity (ROE) is 20%. The price of the common stock after issue costs is $36 per share.

Calculate the weighted average cost of capital (WACC). Carry work out to 4 decimal places. The expansion is expected to produce cash flows of $48,000,000 every year for the next 6 years. Use the WACC to find the net present value (NPV).

Should they expand? Explain. Show work and explain please for lifesaver...

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