=+LG 6 P9–18 Weighted average cost of capital (WACC) Mandy Robertson has just bought a new house and wants to consolidate her finances. She has three loans outstanding. They all mature in 5 years, and she can repay them without penalty any time before maturity. The following table shows the amounts owed on each loan and the annual interest rate associated with each loan.

Loan Balance due Annual interest rate Car £12,000 6%

Credit card 9,000 22 Personal 3,000 14 Mandy can also borrow an additional £24,000 to pay off all her loans. Her bank will charge a 12% annual interest rate for a period of 5 years.

Should Mandy do nothing (pay off her loans individually) or borrow this additional sum to repay her loans together?