Question

Larry Larson has proposed that HopHeart Brewery expand their bottling facility. His proposal will bring in...

Larry Larson has proposed that HopHeart Brewery expand their bottling facility. His proposal will bring in a lot of new revenue. If the company goes forward with his plan, they will generate funds with a mix of 50% bonds paying 9.7%/year. 25% bank loans at 8% per year, and 25% preferred stock with a $5.10 dividend each year The stock will sell for $100 per share. The company is heavily taxed, and pays 45% on all of its net income. What is the WACC? %

HopHeart only approves Projects that return 6% above their WACC. What MARR must Larry show the board in order to get his project approved?

* Answeres are not 5.942 and 11.9425

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