Mina ltd has 300,000 of retained earnings available. The kr is 13%. If the company exhausts the retained earnings it can issue equity whose cost is 14%. The firm expects that it can borrow up to 400,000 at 5.6%, beyond that additional debt will have an after tax cost of 8.4%
Unlimited amounts of funds can be raised by issuing preference stock at a current cost of 10.6%.Mina Ltds capital structure is 40% debt, 50% equity,10% preference.
Calculate the marginal cost of capital of the various ranges of total financing.