WestGas Conveyance, Inc. WestGas Conveyance, Inc. is a large US natural gas pipeline company that wants to raise $120 million to finance expansion WestGas wants a capital structure that is 50% debt and 50% equity. Its corporate combined federal and state income tax rate is 38% WestGas finds that it can finance in the domestic US capital market at the rates inted in the popup window. Both debt and equity would have to be sold in multiples of $20 million, and these cost figures show the component costs, each of debt and equity if raised 50% by debt and 50% by equity Alondon bank advises WestGas that US dollars could be raised in Europe at the following costs, also in multiples of $20 million, while maintaining the 50/50 capital structure. Each increment of cost would be Influenced by the total amount of capital raised. That is, if WestGas first borrowed $20 million in the European market at 8% and matched this with an additional $20 million of equity, additional debt beyond this amount would cont 13% in the United States and 12% in Europe. The same relationship holds for equity financing Calculate the lowest average cost of capital for each increment of 540 million of new capital where WestGas raises $20 million in the equity market and an additional $20 in the debt market at the same time. b. Went Gas plans an expansion of only 560 million, how should that expansion bo financed? c. What will be the weighted average cost of capital for the expansion? 1. If WestGas plans an expansion of 51 20 million, what is the lowest average cost of capital for the first $40 million of new capital? 0% (Round to two decimal places) What is the lowest average cost of capital for the second $40 million of new capital? % (Round to two decimal place) What is the lowest average cost of capital for the third 540 milion of new capital? Round to two decimal places) What will be the weighted average cost of capital for the $120 milion expansion? % (Round to two decimal places) b. WowGas plans an expansion of only 560 million, what will be the weighted average cost of capital for the additional $20 million over the test 8 40 milion of new capital Round to two decimal places) c. What will be the welted average cost of capital for the 500 milion expansion Ex Round No two decimal places 1 Data table (Click on the icon to import the table into a spreadsheet.) Cost of Costs of Raising Capital in the Market Domestic Equity Up to $40 million of new capital 12% $41 million to $80 million of new capital 18% Above $80 million 23% Cost of Domestic Debt 9% 13% 15% Cost of European Equity 14% 16% 24% Cost of European Debt 8% 12% 17% Print Done