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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