The WACC is used as the discount rate to evaluate various capital budgeting projects. However, it is important to realize that the WACC is an approphiate discount rate only for a project of average risk. nalyze the cost of capital situations of the following company cases, and answer the specific questions that finance professionals need to address. Onsider the case of Turnbull Co. umbull Co. has a target capital structure of 45% debt, 4% preferred stock, and 51% common equity. It has a before-tax cost of debt of 11.1%, and ts cost of preferred stock is 12.2%. If Tumbull can raise all of its equity capital from retained earnings, its cost of common equity will be 14.7\%. However, if it is necessary to raise new common equity, it will carry a cost of 16.8%. If its current tax rate is 25%, how much higher will Tumbull's weighted average cost of capital (wacc) be if it has to ralse additional common equity capital by issuing new common stock instead of raising the funds through retained earnings? (Note: Round your intermediate calculations to two decimal places.) 1.18% 1.07% 1.39% 0.96% Turnbult Co. is considering a project that requires an initial investment of $1,708,000, The firm will raise the $1,708,000 in capital by issuing $750,000 of debt at a before-tax cost of 9.6%,$78,000 of preferred stock at a cost of 10.7%, and $880,000 of equity at a cost of 13.5%, The firm faces a tax rete of 25%. What will be the WACC for this project? (Note: Round your intermediate calculations to three decimal places.). Consider the case of Kuhn Co. Kuhn Co, is considering a new project that will require an initial investment of $4 million. It has a target capital structure of 35% debt, 2% preferred stock, and 63% common equity. Kuhn has noncallable bonds outstanding that mature in five years with a foce valiee of $1,000, an annual coupon rate of 10\%, and a market price of $1,050.76. The yield on the company's current bonds is a good approximation of the yield on any new bonds that it issues. The company can sell shares of preferred stock that pay an annual dividend of 39 at a price of $92.25 per share. Kuhn does not have any retained eamings available to finance this project, so the firm will have to issue new common stock to help fund it. Its common stock is currently selling for $2.2.35 per share, and it is expected to pay a dividend of $2.78 at the end of next year. Fotation costs will represent 3% of the funds raised by issuing new common stock. The company is projected to grow at a constant rate of 9.2%, and they face a tax rate of 25%. What wit be the WACC for this project? (Note: Round your intermediate calculations to two decimal piaces.)