Olsen Outfitters Inc. believes that its optimal capital structure consists of 55% common equity and 45% debt, and its tax rate is 25%. Olsen must raise additional capital to fund its upcoming expansion. The firm will have $2 million of retained earnings with a cost of rs- 11%. lew common stock in an amount up to $6 million would have a cost of re- 13.0%. Furthermore, Olsen can raise up to $4 million of debt at an interest rate of ra - 9% and an additional $4 million of debt at ra- 11%. The CFO estimates that a proposed expansion would require n investment of $8.2 million. What is the WACC for the last dollar raised to complete the expansion? Round your answer to two decimal places. 9.71
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- Olsen Outfitters Inc. believes that its optimal capital structure consists of 70% common equity and 30% debt, and its tax rate is 25 %. Olsen must raise additional capital to fund its upcoming expansion. The firm will have $1 million of retained earnings with a cost of rs = 10%. New common stock in an amount up to $10 million would have a cost of re = 11.0%. Furthermore, Olsen can raise up to $4 million of debt at an interest rate of rd = 11% and an additional $3 million of debt at rd = 14%. The CFO estimates that a proposed expansion would require an investment of $8.8 million. What is the WACC for the last dollar raised to complete the expansion? Round your answer to two decimal places.Olsen Outfitters Inc. believes that its optimal capital structure consists of 50% common equity and 50% debt, and its tax rate is 25%. Olsen must raise additional capital to fund its upcoming expansion. The firm will have $1 million of retained earnings with a cost of rs = 13%. New common stock in an amount up to $9 million would have a cost of re = 15.0%. Furthermore, Olsen can raise up to $4 million of debt at an interest rate of r = 10% and an additional $4 million of debt at ra = 14%. The CFO estimates that a proposed expansion would require an Investment of $3.6 million. What is the WACC for the last dollar raised to complete the expansion? Round your answer to two decimal places. %Olsen Outfitters Inc. believes that its optimal capital structure consists of 70% common equity and 30% debt, and its tax rate is 40%. Olsen must raise additional capital to fund its upcoming expansion. The firm will have $2 million of retained earnings with a cost of rs = 12%. New common stock in an amount up to $6 million would have a cost of re = 15.0%. Furthermore, Olsen can raise up to $3 million of debt at an interest rate of rd = 10% and an additional $5 million of debt at rd = 12%. The CFO estimates that a proposed expansion would require an investment of $5.7 million. What is the WACC for the last dollar raised to complete the expansion?
- Olsen Outfitters Inc. believes that its optimal capital structure consists of 65% common equity and 35% debt, and its tax rate is 25%. Olsen must raise additional capital to fund its upcoming expansion. The firm will have $4 million of retained earnings with a cost of rs = 10%. New common stock in an amount up to $9 million would have a cost of re = 13.0%. Furthermore, Olsen can raise up to $3 million of debt at an interest rate of rd = 11% and an additional $6 million of debt at rd = 15%. The CFO estimates that a proposed expansion would require an investment of $7.4 million. What is the WACC for the last dollar raised તોOlsen Outfitters Inc. believes that its optimal capital structure consists of 65% common equity and 35% debt, and its tax rate is 40%. Olsen must raise additional capital to fund it upcoming expansion. The firm will have $2 million of retained earnings with a cost of rs = 11%. New common stock in an amount up to $10,000 would have a cost of re = 12.5%. Furthermore, Olsen can raise up to $4 million of debt at an interest rate of rd = 9% and an additional $3 million of debt at rd = 11%. The CFO estimates that a proposed expansion would require an investment of $6.8 million. What is the WACC for the last dollar raised to complete the expansion? Round your answer to two decimal places.Olsen Outfitters Inc. believes that its optimal capital structure consists of 55% common equity and 45% debt, and its tax rate is 40%. Olsen must raise additional capital to fund its upcoming expansion. The firm will have $4 million of retained earnings with a costof rs 5 11%. New common stock in an amount up to $8 million would have a cost of re 5 12.5%. Furthermore, Olsen can raise up to $4 million of debt at an interest rate of rd 5 9% and an additional $5 million of debt at rd 5 13%. The CFO estimates that a proposed expansion would require an investment of $8.2 million. What is the WACC for the last dollar raised to complete the expansion?
- Ramos Berhad has the following capital structure which it considers optimal: Debt-30%, PS-18%, CS-52%. The Firm paid a dividend of RM2/share last year and its stock currently sells at RM80/share. Tax rate is 35% and investors expect earnings and dividends to grow at a constant rate of 12% in the future. New CS have a flotation cost of 10%. New PS would be sold at RM100/share with a dividend of RM9. Flotation cost is RM6/share. For Debt, it is a 9% irredeemable debt with a current value of RM1,100. Annual interest payment has just been made. What is the weighted average after-tax costs of capital of the company?Klose Outfitters Inc. believes that its optimal capital structure consists of 60% common equity 40% debt, and it tax rate is 40%. Klose must raise additional capital to fund its upcoming expansion. The firm will have $2 million of retianed earnings with cost of rs= 12%. New common stock in an amount up to $6 million would have a cost of re = 15%. Furthermore, Klose can raise up to $3 million of debt at an interest rate of rd = 10% and an additional $4 million debt at rd = 12%. The CFO estimates that a proposed expansion would require an investment of $5.9 million. What is the WACC for that last dollar raised to complete the expansion?The Black Bird Company plans an expansion. The expansion is to be financed by selling $21 million in new debt and $57 million in new common stock. The before-tax required rate of return on debt is 9.77% percent and the required rate of return on equity is 13.11% percent. If the company is in the 34 percent tax bracket, what is the weighted average cost of capital?
- Halfdome believes that its optimal capital structure consists of 55% common equity and 45% debt, and its tax rate is 25%. Halfdome must raise additional capital to fund its upcoming expansion. The firm will have $4 million of retained earnings with a cost of . New common stock in an amount up to $8 million would have a cost of . Furthermore, Halfdome can raise up to $4 million of debt at an interest rate of and an additional $5 million of debt at . The CFO estimates that a proposed expansion would require an investment of $8.2 million. What is the weighted average cost of capital (WACC) for the last dollar raised to complete the expansion? (Assume that cost of debt is 9% and cost of equity is 12.5%). 12.69% 8.45% 10.32% 9.91% None of the aboveThe DEF Company is planning a $64 million expansion. The expansion is to be financed by selling $25.6 million in new debt and $38.4 million in new common stock. The before-tax required rate of return on debt is 0.086 and the required rate of return on equity is 0.125. If the company has a marginal tax rate of 0.26, what is the firm's cost of capital? Instruction: Type your answer as a decimal, and round to three decimal placesLG Co. is trying to estimate its optimal capital structure. Right now, LG has a capital structure that consists of 20 percent debt and 80 percent equity, based on market values. (Its D/S ratio is 0.25.) The risk-free rate is 4 percent and the market risk premium, rM – rRF, is 5 percent. Currently the company’s cost of equity, which is based on the CAPM, is 12 percent and its tax rate is 40 percent. What would be LG’s unlevered beta and estimated cost of equity if it were to change its capital structure to 40 percent debt and 60 percent equity? [Use Hamada equation] Group of answer choices 1.60, and 10.84% 1.39, and 13.74% 1.39, and 15.24% 1.60, and 14.34% 1.95 and 18.72% 1.15, and 11.28%