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d. Mars Company plans to invest $1,000,000 in projects next year. $700,000 will be provided through debt capital with a before tax cost of 9.5%.
d. Mars Company plans to invest $1,000,000 in projects next year. $700,000 will be provided through debt capital with a before tax cost of 9.5%. The remaining $300,000 will be provided through equity capital at a cost of 6.0%. Mar's corporate tax rate is 40%. What is the weighted average cost of capital? (a) 4.82% (b) 5.80% (c) 7.25% (d) 15.50% e. You borrow $90,000 at 10% per year and will pay off the loan in 6 equal annual payments starting one year after the loan is made. The end-of-year payments are $20,664. 66 . Which of the following is true for your payment at the end of year 2 ? (a) Interest is $9,000.00 and principal is $11,664.66. (b) Interest is $8,453.10 and principal is $12,211.56. (c) Interest is $7,833.53 and principal is $12,831.13. (d) Interest is $0 and principal is $20,664.66
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