15. Klose 0 Klose outfitters Inc. believes that its optimal capital structure consists of 60...
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15. Klose 0 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 a have a cost of 15%. Furthermore, Klose can raise up to $3 million debt at an interest rate of 10% and an additional $4 million of debt at 12%. 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?(3 points) a. 11.4% b. 10.6% c. 13% d. 7.2%
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