What is the bond-yield-plus-risk premium estimate

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The current price of Williams 10 percent coupon price, semiannual payment, noncallable bonds with 15 years remaining to maturity is $1,140.00. The firm uses the maximum of the risk premium range. What is the bond-yield-plus-risk premium estimate for Williams cost of common equity?

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 retained earnings with a cost of 12%. New common stock in an amount up to $6 million would have a cost of 15%. Furthermore, Klose can raise up to $3 million of debt at an interest rate of 9% and an additional $4 million of debt at 11%. 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?

Reference no: EM131354359

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