PRESS Check My Work eBook Olsen Outfitters Inc. believes that its optimal capital structure consists of 40% common equit

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Press Check My Work Ebook Olsen Outfitters Inc Believes That Its Optimal Capital Structure Consists Of 40 Common Equit 1 (48.93 KiB) Viewed 42 times

PRESS Check My Work eBook Olsen Outfitters Inc. believes that its optimal capital structure consists of 40% common equity and 60% debt, and its tax rate is 25%. Olsen must raise additional capital to fund its upcoming expansion. The firm will have $1 million of retained earnings with a cost of to = 10%. New common stock in an amount up to $6 million would have a cost of re- 11.0%. Furthermore, Olsen can raise up to $4 million of debt at an interest rate of fo = 9% and an additional $3 million of debt at ra = 13%. The CFO estimates that a proposed expansion would require an investment of $4.6 million. What is the WACC for the last dollar raised to complete the expansion? Round your answer to two decimal places. % 12 AN X 16