I apologize for the sideways picture, my computer is being dysfunctional. If som

Question

I apologize for the sideways picture, my computer is being dysfunctional. If someone could answer each part for me would greatly appreciate it, thanks!

Your firm has the following capital Loans $ 25,000.00 10% Bonds $ 50,000.00 3d Their corporate tax rate is 40% 10) What is Cost of Capital for their loans? (5 points) a) 4.00% b) 6,00% c) 10.00% d) 40.00% (5 points) 11) What is the Cost of Capital for their bonds? a) 1.80% b) 3.00% c) 7.50% d)40.00% (10 points) 12) What is the firm's WACC? a) 1.80% b) 3,00% c) 3.20% d)6,00% averase cost of captal 13) The firm uses a MARR-896 Based on the available information is this acceptable? (5 points) a) No, because the MARR WACC b) No, because the MARRcorporate tax rate c) Yes, because the MARR> WACC which can set the MARR's lower limit d) Yes, because the MARR> Sum of the k values

Explanation / Answer

Cost of capital on Loans 10%(1-.40) 10%*.6 6% The correct option is b) 6% Cost of capital on bonds 3%(1-.4) 1.80% The correct option is a) 1.80% WACC = 250000*6%/750000+50000*1.8%/75000 .06%+1.2% WACC = 1.80% The correct option is a) 1.8%

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