The question was answered but incorrectly. These were the mistakes "First, you need to calculate preferred, common and debt and have weights and costs separate. You used the wrong risk free rate in finding cost of equity.You should multiply price x shares to get values for preferred and equity weights.You need to solve for the other values then do the weights then do the formula for WACC.Use Div/P for preferred.For cost of equity you used 3% as Rf and the CAPM.You did not calculate weights correctly.You are supposed to find the cost of preferred and have weights for debt, common and preferred.Your cost of debt is not correct.The 8% is a coupon rate used to find the annual coupon payment. You need to use the rate function to solve for the cost of debt. For the second part, debt financing, you need to find the cost of the new debt which only applies to the new debt."

You are given the following information about a company. Their tax rate is 34%. The firm is in need of $5 mi external funds. Your bond advisor suggests that new bond issues can be lower than the current yield to mat You are not sure he is correct. Should you issue the new debt to raise money? Existing capital structure: Debt: 5,000 Eight percent (8%) coupon bonds outstanding. The par value is $1000 and they mature in te Equity: 50,000 shares outstanding. The common stock is currently selling for $72 per share. The beta fo Preferred Stock: 10,000 shares of 2% preferred stock with a par value of $100, and is currently selling f Market Information: The risk of the market is 6% and the risk-free rate is 2%. The industry debt-equity The flotation rate for new debt is 3% and for new equity it is 5%. 1 Calculate the existing weighted average cost of capital. 2 New cost of capital if add 5M in new bonds This assumes we sell enough bonds to realize 5M. Since the price will be net of flotation we need to sel 3 What if they finance the 5M with all equity? What would the capital structure and WACC look like? 4 What if they add 5M in financing split among debt and equity in proportions equal to the current capital . The firm is in need of $5 million dollars in than the current yield to maturity by 2.0% . $1000 and they mature in ten years. They are currently selling for $1250 and make semiannual payments. r $72 per share. The beta for the company is 1.15. 0, and is currently selling for $65 per share. . The industry debt-equity ratio is 33%. of flotation we need to sell them at 1000 but net a bit less. e and WACC look like? equal to the current capital structure. What is the WACC? l payments