Suppose that as a financial manager you have collected the following information on your company.
| Before-tax cost of debt | 6.5% |
| Tax rate | 40% |
| Total long term debt | $400,000 |
| Cost of preferred stock | 7.25% |
| Total preferred stock | $50,000 |
| Cost of common stock | 11% |
| Total common stock | $500,000 |
| Finance Utilized | $850,000 |
The firm is considering undertaking a project that costs $250,000 with an expected return of 13.5%. Not having enough existing capital, how would you recommend going about obtaining the additional funds? Use the current WACC in your analysis. Discuss how the current WACC will change based on the type of financing chosen.
Provide a scenario that would allow the company to undertake the project and make the resulting WACC more favorable.
Your document should be between 400-500 words and add credible resources.
