The cfo estimates, Finance Basics

Klose Outfitters Inc. believes that its optimal capital structure having of 60% common equity and 40% debt, and its tax rate is 40%. Klose have raise additional capital to fund its upcoming expansion. The firm will has $2 million of new retained earnings with a cost of rs=11.77%. New common stock in an amount up to $6 million would have a cost of re=14.82%. Moeover, 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 needs an investment of $5.9 million. What is the WACC for the last dollar raised to done the expansion?

Posted Date: 3/18/2013 9:05:28 AM | Location : United States

Related Discussions:- The cfo estimates, Assignment Help, Ask Question on The cfo estimates, Get Answer, Expert's Help, The cfo estimates Discussions

Write discussion on The cfo estimates
Your posts are moderated
Related Questions
main function of the insurance market

Buying Shares of a Company Factors should be refer when Buying Shares of a Company 1. Economic situation of the country and other non-economic factors as like unfavorable c

Debenture Finance A type of long term debt raised after a company sells debenture certificates to the holder and raises finance in return. The term debenture has its source fr

Shareholders' wealth maximization - Objectives of Business Entity Shareholders' wealth maximization refers to maximization of the total present value of each decision made in

Dividend yield or Gordon's Model This model is used to determine the cost of various capital components in particular: Cost of equity - K e Cost of preferenc

Expectation Theory The theory states here that the yield curve depends on the expectation concerning with future inflation rates. The rate on long-term bonds will exceed, If i

Central Depository System or C.D.S Its computerized ledger systems which enable the transfer or holding of securities with no necessitate for physical movement.  The shares or

Given the following Present Value Plot for Projects A and B, which are mutually exclusive projects, answer the following questions: (i) What is the DCFROR for Project A? fo

A new pet shop wants to apportion their investment money $132,000 for advertising, building upgrades, and education in the ratio of 5:4:3. How much money does each category get app