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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?