The Expanding Capital Corpor, assignment help

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The Expanding Capital Corporation has a current capital structure of $15
million in secured bonds paying 6.5% annual interest, $10 million in preferred
stock with a par value of $50 per share and an annual dividend of $3.80 per
share, and common stock with a book value of $75 million.  It is about to
issue new debentures in the amount of $10 million paying 7.5% annual
interest.  Its CFO says its marginal tax rate is 30% and its cost of
common equity capital is 12%.  Calculate the company’s Weighted Average
Costs of Capital for the following:

Before the new
bond issue

After the new
bond issue

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