In: Finance
You are required to use a financial calculator or spreadsheet (Excel) to solve 10 problems related to the cost of capital. You are required to show the following 3 steps for each problem: (i) Describe and interpret the assumptions related to the problem. (ii) Apply the appropriate mathematical model to solve the problem. (iii) Calculate the correct solution to the problem. Round all answers to two decimal places
Fisheye Inc. is investing in a new project costing $20 million. It will raise $6 million in bonds, $4 million in preferred stock, and $10 million in retained earnings. If the after-tax cost of debt is 6%, cost of preferred stock is 10%, the cost of retained earnings is 14%, and the cost of new common stock is 18%, what is the WACC?