Cost of capital of the various ranges of total financing

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Mina ltd has 300,000 of retained earnings available. The kr is 13%. If the company exhausts the retained earnings it can issue equity whose cost is 14%. The firm expects that it can borrow up to 400,000 at 5.6%, beyond that additional debt will have an after tax cost of 8.4%

Unlimited amounts of funds can be raised by issuing preference stock at a current cost of 10.6%.Mina Ltds capital structure is 40% debt, 50% equity,10% preference.

Calculate the marginal cost of capital of the various ranges of total financing.

Reference no: EM131114016

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