Michigan Manufacturing Inc. (MM) has a new project that will require the company to borrow $1,000,000. MM has made an agreement with three lenders for the needed financing
First National Bank will give $500,000 and wants 9% interest on the loan. Key West Bank will give $300,000 and wants 11% interest on the loan. Chase Bank will give $200,000 and wants 12% interest on the loan. What is the weighted average cost of capital for this $1,000,000?
A) 10.67%
B) 10.20%
C) 10.00%
D) 9.67%
Answer: B
Explanation: B) WACC = × 9% + × 11% + × 12% = 10.20%.
You might also like to view...
_____________ - "beyond the power." Acts beyond its express or implied powers are ultra vires acts. Shareholders can seek an injunction from a court to prevent the corporation from engaging in ultra vires acts.
Fill in the blank(s) with the appropriate word(s).
The period of highest risk impact for a project risk exists primarily in the:
A) Development stage of the project life cycle. B) Concept stage of the project life cycle. C) Implementation stage of the project life cycle. D) Termination stage of the project life cycle.