FIN 419 ASSIST Perfect Education/fin419assist.cofi FIN 419 ASSIST Perfect Education/fin419assist.cofi | Page 59

9. ICS plans to expand their operations as stated in Problem 5 –
and are considering taking the loan – however, they have a few
investors that are interested in lending money for this venture.
They need a total of $775,000, and if they lend the money today, ICS
will repay it, with interest, at the end of the year. Company A
agrees to lend $300,000 and they require 5% interest, Company B
will lend $200,000 at 6% interest, and Company C will loan the
balance but they won’t settle for less than 10% interest. What is the
weighted average cost of this capital (WACC)?
10. In 250-350 words, explain what cash flow is and why cash is so
important to a business.
Include in your analysis the cash that ICS maintains on hand and
whether it is sufficient or not.
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