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
Timing of Investment a Stock Exchange The ideal way of creation profits on the stock exchange is to buy on the bottom of the market or lowest M.P.S and sell at the top of the

Bird-in-hand Theory Advanced via John Leitner in year 1962 and furthered with Myron Gordon in year 1963. Argues such shareholders are risk averse and prefer specific. Dividend

Contribution Margin The Average of the industry Contribution Margin (CM) was 15.40% for 2004, 14.39% for 2005, and 13.18% for 2006. The chart showed that Contribution Mar

You are taking an investment in the common stock of Crisp's Cookware. The stock is expected to pay a dividend of $2.00 a share at the end of the year (D1=2.00). The stock has a bet

Potential Investors - Measuring Business Performance Potential investors These parties are interested in a company in total both on long and short term basis in particula

Production data has been fit to a Fetkovich type curve. Given the following information, answer the questions: Date of first production plotted for the Fetkovich type curve matc

Example of Dividend Basis Valuation Company Laxmi Synthetics pays a dividend of 10% on its Sh.60 par value ordinary shares.  This company uses a discount rate of 15%.  A

1. A stock pays no dividend and is expected to be sold for $50 after 4 years. If the investor's RRR is 12%, at what price is he/she willing to buy it? 2. ABC company has its ROE

The operating and cost data of ABC Ltd. are: Sales Rs. 20,00,000 Vari

Reasons for major Growth in Venture Capital Reasons for Significant Growth in the Developed Countries in Venture Capital i) Public attitude that is a favorable attitude