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Problem

Jensen Motorsports has a new project that will require the company to borrow $3,000,000. Jensen's has made an agreement with three lenders for the needed financing. Citizens Bank will give $1,500,000 and wants 10% interest on the loan. Visitors Bank will give $1,000,000 and wants 12% interest on the loan. Peoples Bank will give $500,000 and wants 13% interest on the loan.

Required:

Question: What is the weighted average cost of capital for this $3,000,000?

Note: Show supporting computations in good form.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91170122

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