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A $6M investment is considered by an electric bike manufacturing company to add a new production line for its new product, electric skateboards. The company

A $6M investment is considered by an electric bike manufacturing company to add a new production line for its new product, electric skateboards. The company has commissioned an exploratory study of where to place the new production line and which type of equipment to use. There are three types of machines to choose from for the company to install on the new assembly line. The machines have zero salvage value at the end of 10-year planning horizon. The company has selected Loans and Retained Earnings to obtain the required amount of capital for the investment. Each of these capital sources provide $3,000,000 to support the project. Calculate the WACC for the project

Loan : $ 3,000,000 Interest Rate = 8 %, Compounded Semi Annually. Payback Method: Make equal end of period payments over the loan period

Retained Earning : $ 3,000,000

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