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tatyana61 [14]
3 years ago
7

WACC. Eric has another​ get-rich-quick idea, but needs funding to support it. He chooses an​ all-debt funding scenario. He will

borrow ​$4 comma 3114,311 from​ Wendy, who will charge him 66​% on the loan. He will also borrow ​$3 comma 3503,350 from​ Bebe, who will charge him 88​% on the​ loan, and ​$1 comma 3391,339 from​ Shelly, who will charge him 1414​% on the loan. What is the weighted average cost of capital for​ Eric?
Business
1 answer:
maks197457 [2]3 years ago
5 0

Answer:

274.7%

Explanation:

The total amount that Eric will borrow will be = 43114311+33503350+13391339 = 90009000.

Now to calculate WACC, we will apply the WACC formula:

WACC = (43114311/90009000)*0.66 + (33503350/90009000)*0.88 + (13391339/90009000)*14.14

Hence,

WACC = 274.74%

The solution was very simple, we just applied the WACC formula by taking the total amount of debt in the denominator of each of the loans taken and multiplied it by the interest rate on which it is taken.

Hope this helps, although I think the values in the question are not correct, but nonetheless I have provide the correct solution according to the given values.

Thanks.

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Question 1<br> What is the most important question you should have after seeing this ad about a check cashing business?<br> Why
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The most important question you should have after seeing this ad about a check cashing business is"

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So, the most important question you should have after seeing this ad about a check cashing business is"

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Learn more about check cashing business from

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6 0
2 years ago
Company X has 100 shares outstanding. It earns $1,000 per year and expects to pay all of it as dividends. If the firm expects to
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Answer:

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