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Date Posted: 17:38:41 08/16/07 Thu
Author: Joe (CONFUSED)
Subject: Finance Homework Help

Can someone help me get started???

Fun Company has been growing at a constant rate of 4% a year. Its
retained earnings for the year are $8.5 million, common stock is selling
for $45, and the current debt to assets ratio is 45%

The company can raise up to $8 million in debt at 7%. A 10% interest
will apply if the amount exceeds $8 million. New common stock yields
the firm $41. The required rate of return on retained earnings is 10%.
The tax rate is 40%.

Calculate the marginal cost of capital (WACC) above and below the break
points in the MCC schedule.

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