dreampak

that kind of helps…..I understand “beyond retained earnings…”
But again, question one is not completely clear.
Here’s my train of thought:
The question reads “Munn believes that Bailey will be able to issue new debt at a cost of 9% and new equity at a cost of 18%.”
Yes, I understand that the CAPM asks for expected market return. But in calculating the WACC for q1, we use the 9% cost of debt (as stated in the sentence)…so accordingly, I’d assume we’ll also use the 18% cost of equity in WACC? I’m sorry for being repetitive, but I’m a having a mind block here :/
Thanks for all the help!