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TransCaladonia issued some bonds to fund a new project. How much debt did they issue if their WACC dropped to 9%. Consider X amount is
TransCaladonia issued some bonds to fund a new project. How much debt did they issue if their WACC dropped to 9%.
Consider X amount is issued for bonds to fund new project .
Substitute in WACC equation ,
WACC 9% = (( $2,000,000 +X) 6% + $500,000 x 8% + $2,500,000 x12%) / ($5,000,000 +X)
By solving this we will get issued funds for new project as$333,333
Can you please break down the steps of this calculation? I'm not sure how the formula equals $333,333: WACC 9% = (( $2,000,000 +X) 6% + $500,000 x 8% + $2,500,000 x12%) / ($5,000,000 +X)
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