WACC Olsen Outfitters Inc. believes that its optimal capital structure consists of 65% common equity and 35%...

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WACC
Olsen Outfitters Inc. believes that its optimal capitalstructure consists of 65% common equity and 35% debt, and its taxrate is 40%. Olsen must raise additional capital to fund itsupcoming expansion. The firm will have $3 million of retainedearnings with a cost of r_s = 12%. New common stock in anamount up to $6 million would have a cost of r_e = 16%.Furthermore, Olsen can raise up to $4 million of debt at aninterest rate of r_d = 9% and an additional $3 million ofdebt at r_d = 11%. The CFO estimates that a proposedexpansion would require an investment of $7.9 million. What is theWACC for the last dollar raised to complete the expansion? Roundyour answer to two decimal places.
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WACCOlsen Outfitters Inc. believes that its optimal capitalstructure consists of 65% common equity and 35% debt, and its taxrate is 40%. Olsen must raise additional capital to fund itsupcoming expansion. The firm will have $3 million of retainedearnings with a cost of rs = 12%. New common stock in anamount up to $6 million would have a cost of re = 16%.Furthermore, Olsen can raise up to $4 million of debt at aninterest rate of rd = 9% and an additional $3 million ofdebt at rd = 11%. The CFO estimates that a proposedexpansion would require an investment of $7.9 million. What is theWACC for the last dollar raised to complete the expansion? Roundyour answer to two decimal places.%