Eric has another get-rich-quick idea but needs funding to support it. He chooses an all-debt funding scenario.

Question:

Eric has another get-rich-quick idea but needs funding to support it. He chooses an all-debt funding scenario. Eric will borrow $2,000 from Wendy, who will charge Eric 6% on the loan. He will also borrow $1,500 from Bebe, who will charge 8% on the loan and $800 from Shelly, who will charge 14% on the loan. What is the weighted average for Eric?

Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...