Wes Gas Conveyance nc. West 3 s onveyance, Inc s a large US natural gas pipeline company hat wants to raise $120 million o finance expansion. West e s wants a cap al structure hat is 50% debt and 50% equity lts corporate com bined ederal and state ncome tax rate 35% Wes G8 tind that t can tinance in the domestic ? s capital market a the rates l sted in the poup window costs, each, of debt and quity if raised 50% by debt and 50% by equity. A Lndon hank advises WestGas that US dollars couk be rased in Euroce at the fallowing msts, also in miultiplos af S20 million, whic maintaining the 5050 capital structure Each crement ot cost would be nti enced by the total amount otcap al alsed l hat s t wes Ges tirst borrowed $20 milion n the European market at 5%?nd matched this with an additional $20 milion ot equity, addrtonal debt beyond this amount would cost 11% in the United States and g% in Furope The same relationship holds tor equity financing Both debt and equity would have to he soli in mulhples ot $20 milian, and these cost hgures show the component a. Calculate he lowes average o slof capital each mce nen of $40 ""llion o new t pilal, where wes Gas raises $20 millon n he equity markel an an ad ional $20 n he debl markel a the same limB b. It WestGas plans an expansion of only S6D million, how should tat expansion be tnanced what will he the weightedaverage ost ot capital for the expansion a. If WesiGas plans arn expansion of $120 million, what is the kwest averge cost of capital for the first $40 millio of riew capilal? (Round to two decimal places Data Table Cost of Europcan Debt 5% 9% 19% Cost of Domestic Cost of Domestic Debt 7% 11% 17% Cost of Furopcan Costs of Up to $10 milion of new capital $41 million to $90 million of new capital Above S80 million Capital in the Market 12% 18% 22% 17% 23% Print Done