Situation:
Mr. Chase Williams works for an investment firm. The management of the AA Index Corporation has asked you to calculate the Weighted Average Cost (WACC) of the funding sources, which they need to evaluate a new and possible investment. The firm is considering the purchase of a new building that will provide storage facilities for its inventories. It is understood that this investment could improve the firm's productive capacity. It has been estimated that the proposed investment could generate a return rate of 12%.
Mr. C. Williams has been provided with the following information regarding the capital structure of the firm:
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