1) Use Excel to calculate WACC
2) Use Word to explain how the capital structure would need to change to reduce cost of capital
3) Determine if the capital structure is at optimal level now, explain in detail why you believe this to be true
4) If the capital is not optimal, would altering it increase or decrease the cost of capital. Explain in detail.
These are the following facts:
- Company debt and other long-term obligations are $14 million.
- The split for the $14 million is $5 million in bonds that are at 8% and $9 million in a long-term loan at 7.5%
- Company equity is $150.1 million.
- Cost equity (according to SML) is 9%.
- The company is in the 40% tax bracket
Include references except from Wikipedia and please include a word document with the explanations and not on the Excel spreadsheet.