Business
Business, 13.07.2019 14:30, scarbroughmary0

Klose outfitters inc. believes that its optimal capital structure consists of 60% common equity and 40% debt, and its tax rate is 40%. klose must raise additional capital to fund its upcoming expansion. the firm will have $2 million of new 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%. furthermore, klose can raise up to $3 million of debt at an interest rate of rd = 10% and an additional $4 million of debt at rd = 12%. the cfo estimates that a proposed expansion would require an investment of $5.9 million. what is the wacc for the last dollar raised to complete the expansion?

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