If its current tax rate is 40%, Turnbull’s weighted average cost of capital (WACC) will be (1.23 / 1.07 / 1.44 / 0.91) higher if it has to raise additional common equity capital by issuing new common stock instead of raising the funds through retained earnings. Turnbull Company is considering a project that requires an initial investment of $1,708,000.00. The firm will raise the $1,708,000.00 in capital by issuing $750,000.00 of debt at a before-tax cost of 9.60%, $78,000.00 of preferred stock at a cost of 10.70%, and $880,000.00 of equity at a cost of 13.50%. The firm faces a tax rate of 40%. The WACC for this project is (6.48 / 9.97 / 6.98 / 8.47) .


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