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stranahan stranahan
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Posts: 3324
5 years ago
Jensen Motorsports has a new project that will require the company to borrow $3,000,000. Jensen's has made an agreement with three lenders for the needed financing. Citizens' Bank will give $1,500,000 and wants 10% interest on the loan. Visitors' Bank will give $1,000,000 and wants 12% interest on the loan. Peoples' Bank will give $500,000 and wants 13% interest on the loan. What is the weighted average cost of capital for this $3,000,000?
A) 11.17%
B) 12.16%
C) 11.66%
D) 10.55%
Textbook 

Financial Management: Core Concepts


Edition: 2nd
Author:
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clockfitnessclockfitness
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Posts: 243
5 years ago
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More questions for this book are available here
A -- WACC = ($1,500,000/$3,000,000) × 10% + ($1,000,000/$3,000,000) × 12% + ($500,000/$3,000,000) × 13% = 11.17%

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