Business Finance
Colorado State University Weighted Average Cost of Capital Analysis Paper

Colorado State University

Question Description

I’m stuck on a Accounting question and need an explanation.

Suppose that as a financial manager you have collected the following information on your company.

Before-tax cost of debt6.5%
Tax rate40%
Total long term debt$400,000
Cost of preferred stock7.25%
Total preferred stock$50,000
Cost of common stock11%
Total common stock$500,000
Finance Utilized$850,000

The firm is considering undertaking a project that costs $250,000 with an expected return of 13.5%. Not having enough existing capital, how would you recommend going about obtaining the additional funds? Use the current WACC in your analysis. Discuss how the current WACC will change based on the type of financing chosen. Debt vs. Equity?

Your document should be at least 150 words with credential resources.

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Final Answer

please find the attached file. i look forward to working with you again. good bye

WACC IN ANALYSIS

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WACC in Analysis – D7.1
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WACC IN ANALYSIS

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WACC in Analysis – D7.1

The weighted average cost of capital (WACC) is a metric that allows companies to assess
the overall cost of financial acquisition. It is the weighted average cost of equity, preferred stock,
debt and any other capital source (Frank & Shen, 2016). The information supplied by the
financial manager will enable the calculation of t...

chemtai (23904)
Duke University

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