Tumbull 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 its cost of preferred stock is 12.2%. If Turnbull can raise all of its equilty 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 Turnbull's weighted average cost of capital (WACC) be if it has to raise 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) O 1.07% 1.18% 1.28% 1.23% Turnbull Co. is considering a project that requires an initial investment of $270,000. The firm will raise the $270,000 in capital by issuing $100,000 of debt at a before-tax cost of 8.7%, $30,000 of preferred stock at a cost of 9.9%, and $140,000 of equity at a cost of 13.2%. The firm faces a tax rate of 25%. What will be the WACC for this project? (Notex Round your intermediate calculations to three decimal places.) 9.84% Consider the case of Kuhn Co. 10.36% Kuhn Co. is considering a new project that will re tal investment of $20 million. It has a target capital structure of 35% debt, 2% preferred stock, and 63% common equity. Kuhn has nonca 8.81% 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 yie Jompany's current bonds is a good approximation of the yield on any new bonds that it issues. The company can sell shares of preferred pay an annual dividend of $8 at a price of $95.70 per share. 8.2996 Consider the case of Kuhn Co. Kuhn Co. is considering a new project that will require an initial Investment of $20 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 face value of $1,000, an annual coupon rate of 10%, and a market price of $1,050.76. The yield of 11.79% pony's current bonds is a good approximation of the yield on any new bands that it issues. The company can sell shares of preferred stoc n annual dividend of $8 at a price of $95.70 per share. 10.72% Kuhn does not have any retained earnings available to 11.26% is project, so the firm will have to issue new common stock to help fund it. Its common stock is currently selling for $33.35 per shard expected to pay a dividend of $1.36 at the end of next year, Flotation costs will 10.18% represent 8% of the funds raised by issuing new com The company is projected to grow at a constant rate of 8.7%, and they face a tax rate of 25%. What will be the WACC for this project? (Note: Round your intermediate calculations to two decimal places.)
