The question is on the WACC. Information below to determine Kd, Ke, Kne

Given the capital structure and acquisition details, estimate the weighted average cost of capital (WACC) for this upgrade project.

Weighted Average Cost of Capital

Ka = ________

After-Cost of Debt

Company wants to issue 10-year corporate bond at a $1,000 price with 15.00% coupon rate and the issuance cost of each bond is $20 for each bond. The "Kdbt" is estimated at 6.84%.

(Company will finance project by blending 40.00% of debt (long-term corporate bonds)

Costs of new retained earnings (internal common equity)

Company wants to reinvest its retained earnings by selling for its common stock for $56.00. This stock pays a current dividend of $0.20 per share and earnings and dividends are expected to grow at 10.00% rate into foreseeable future.

(Company finances project by 30.00% new retained earnings as internal equity and not going to use preferred stock)

Cost of External Equity (New Common Stock Issuances)

Common stock is currently selling for $39.00 per share. Stock expects to pay a current dividend of $1.60 per share and earnings and dividends are expected to grow at 7.00% rate. The issuance costs on this stock are $2.00 per share.

(financed with blend of 40.00% debt, 30.00% new retained earnings as internal earnings and 30.00% external equity for new common stock issuances)