The WACC is used as the discount rate to evaluate various capital budgeting projects, However, it is important to realize that the WACC is only an appropriate discount rate for a project of average risk-in other words, a project that has the same beta as the company. If a project has less risk, than the overall company risk, it should be evaluated with a jower discount rate; if a project is riskier than the overall company risk, it should be evaluated using a discount rate higher than the company wAcC: Analyze the cost of capital situations of the following company cases, and answer the spectic questions that finance professionals need to address: Consider the case of Turnbull Co. Tumbull Co. has a target capital structure of 45% debt; 4% preferred titock, and 51% common equity. It has a beflore-tax cost of debt of 11.1%, and its cost of preferred stock is 12.2%. If Turnbull can ralse all of its equity eapital from retained earnings, its cost of common equity will be 14.7%, Howeves, it it is necessary to nise new common equity, it will carry a cost of 16.8%. If its current tax rate is 40%, how much hilier will Tumbull's weighted averoge cost of capital (WACC) be it it has to raise additicnal common equity capital by issuing new common stock instead of raising the funds through retained earnings? (Note: Do not round your intermedlate calculations.) 1.07% 1.20% 1.39% 1.34% Turnbull Ce. is considering a project that requires an initial imvestment of $270,000. The firm will rase the $220,000 in capital by issuing $100,000 of debt at a before-tax cost of 10.2%,$30,000 of preferred stock at a cost of 11.4%, and $140,000 of equity at a cost of 14.3%. The firm faces a tax rate of 40%. What will be the WACC for this project? (Note: Do net round intermediate calculabions.) Consider the case of Kuhn Co. stock, and 36% common equity, Kuhn has noncalsble bonds outstanding that mature in five years with a face value of $1,000, an annual coupon rate of 10%, and a market price of $1,050.76. The yield on the company current bonds is a good approximation of the yeld on any new bends that it issues. The company can seli shares of preferred stock that pay an annugl dividend of $92 at a price of $92.25 per share. You can assume that jordan does not incur any flotation costs when lissuing debt and preferred stock. Kuhn does not have any retained earnings avallable to finance this project, so the firm will have to issue new common stock to help fund it. Its represent 8% of the funds raised by bsuing new common stock. The eompany a projected to grow at a constant rate of 8.7%, and ther face a tax rate of 40%. Determine what Kuhn Companys WACC will be for this peoject