3. Suppose that TRM Consulting Services has discussed its need for capital with its investment...
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3. Suppose that TRM Consulting Services has discussed its need for capital with its investment bankers. The bankers have estimated that TRM can raise new funds in the capital markets under the following conditions: After-Tax Source Range Cost Retained Earnings Up to 150,000 10.50% Common Equity Up to 1,000,000 10.93% 1,000,001 to 3,000,000 11.26% More than 3,000,000 11.85% Preferred Equity Up to 200,000 4.86% More than 200,000 6.25% Debt Up to 1,000,000 4.33% 1,000,001 to 2,000,000 4.86% More than 2,000,000 5.12% a. Using the information from the previous problem, calculate each of the break-points, including the break-point due to retained earnings. b. Create a chart of TRM's marginal WACC curve using the market- value weights. Make sure that it is a perfect step function
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