Business, 18.12.2019 02:31 edjiejwi

Marginal incorporated (mi) has determined that its before-tax cost of debt is 5% for the first $25 million in bonds it issues, and 9% for any bonds issued above $25 million. its cost of preferred stock is 13%. its cost of internal equity is 16%, and its cost of external equity is 18%. currently, the firm's capital structure has $410 million of debt, $80 million of preferred stock, and $510 million of common equity. the firm's marginal tax rate is 45%. the firm is currently making projections for next period. its managers have determined that the firm should have $53 million available from retained earnings for investment purposes next period. what is the firm's marginal cost of capital at each of the following total investment levels?

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Marginal incorporated (mi) has determined that its before-tax cost of debt is 5% for the first $25 m...