Use the following to answer questions 15-20. Javi's Yoga on the Beach has the following optimal capital structure: 50% debt, 20% preferred stock, and 30% common equity. They are in the 35% tax bracket. The company has a credit line with a bank up to $1,000,000 at 6%. Amounts borrowed above S 1,000,000 are at an interest rate of 7 of $3 per share and has a flotation cost of $3/share. The and the cost of issuing new common stock is 1 5%. The firm has $1,350,000 in retained earnings. Preferred stock has a market price of $25/share, pays dividends cost of common equity is 14% 15. What is the firm's after tax cost of debt if they borrow $800,000? A) 3.9 % B)21% C)6% D) 6.5% 16. What is the firm's WACC if it finances with retained earnings and borrows less than or equal to $1,000,000? A) 7.67% B) 6.72% C) 8.87% D) 2.56% 17. What is the firm's cost of preferred stock? A) 13.6% B) 1290 C) 10.7% D) 8.3% 18. What is the firm's WACC if it finances by issuing new common stock and borrows S1. million? A)9.1790 B) 9.5% C) 10.2% D) 8.8790 19. Suppose Javi's Yoga on the Beach has decided to build an indoor workout facility for rainy days. They need $4,100,000 for the expansion. What is the MCC of the project? A) 8.87% B) 9.2% C) 9.9% D) 14% 20. What is the firm's equity break point? A) $1,350,000 B) $2,000,000 C) $4,000,000 D) $4,500,000