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This Tutorial contains excel sheet
P 11-1
Eric has another get-rich-quick idea, but needs funding to support it. He
chooses an all-debt funding scenario. He will borrow $3683 from
Wendy, who will charge him 7% on the loan. He will also borrow $3165
from Bebe, who will charge him 9% on the loan, and $2152 from Shelly,
who will charge him 15% on the loan. What is the weighted average cost
of capital for Eric?
P11-2
Question : Grey’s pharmaceuticals has a new project that will require
funding of $13.0 million. The company has decided to pursue an all-debt
scenario. Grey’s has made agreements with four lenders for the needed
financing. These lenders will advance the following amounts at the
interest rates shown:
P11-3
Question : Cost of debt. Kenny Enterorises has just issused a bond with
a par value of $1,000, a maturity of twenty years, and a coupon rate of
9.4% with semiannual payments. What is the cost of debt for Kenny
Enterprises if the bond sells at the following prices? What do you nitice
about the price and the cost of debt?
a.
What is the cost of debt for Kenny Enterprises if the bond sells at
$941.16?
b. What is the cost of debt for Kenny Enterprises if the bond sells at
$1,000.00?