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The firm raises funds in increments of $2,500,000 consisting of $500,000 in debt and $2,000,000 in equity. This strategy maintains the capital structure of
The firm raises funds in increments of $2,500,000 consisting of $500,000 in debt and $2,000,000 in equity. This strategy maintains the capital structure of 20 percent debt and 80 percent equity. Develop the marginal cost of capital schedule through $13,000,000. Round your answers for the break-points to the nearest dollar and for the marginal costs to one decimal place. The marginal cost of capital schedule: $0-$ cost of debt: cost of equity: cost of capital: % % % $ $ cost of debt: % cost of equity: % cost of capital: % above $ cost of debt: % cost of equity: % cost of capital: % What impact would each of the following have on the marginal cost of capital schedule? e. the firm's income tax rate increases If income tax rates were to rise, the effective cost of debt would decline and the marginal cost of capital would decline at all levels. f. the firm retains all of its earnings and the price of the stock is unaffected. Round your answers for the break-point to the nearest dollar and for the marginal costs to one decimal place. The marginal cost of capital schedule:
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