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Furkat [3]
3 years ago
15

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

ow ​$1 comma 823 from​ Wendy, who will charge him 4​% on the loan. He will also borrow ​$1 comma 533 from​ Bebe, who will charge him 6​% on the​ loan, and ​$644 from​ Shelly, who will charge him 12​% on the loan. What is the weighted average cost of capital for​ Eric? What is the weighted average cost of capital for​ Eric?
Business
1 answer:
Sergio039 [100]3 years ago
7 0

Answer:

6.04%

Explanation:

The weighted average cost of capital (WACC) can be described as the average rate that is expected that a business will pay to finance its assets to all holders of its security.

The weighted average cost of capital (WACC) can be estimated as the summation of the products of the weight of each loan in the total loan and their interest rate for this question as follows:

Total loan amount = $1,823 + $1,533 + $644 = 4,000

Weight of loan from Wendy = $1,823 / $4,000 = 0.46, or 46%

Weight of loan from Bebe = $1,533 / $4,000 = 0.38, or 38%

Weight of loan from Shelly = $644 / $4,000 = 0.16, or 16%

Weighted average cost of capital  = (46% * 4%) + (38% * 6%) + (16% * 12%) = 6.04%.

Therefore, the weighted average cost of capital for​ Eric is 6.04%.

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= 23,000 + 10,500 + 7,500 - 8,250 - 7,000

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3 years ago
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Using the percentage of net sales method, uncollectible accounts expense for the year is estimated to be $54,000. If the balance
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Answer:

The correct answer is c) $72,000

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6 0
3 years ago
You conducted a study on the efficacy of seatbelt use against the incidence of a skeletal fracture among persons involved in an
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Monthly rent is $2,500 which is fixed so, it would be considered as fixed cost

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