E11 D A 1 Scenario: F G H A certain project involves a $1,000,000 investment, and promises $120,000 in the first year. 4 You plan to source $750,000 from the bank, and $250,000 from shareholders. 5|Assume the bank's rate is 5%, the cost of equity is 10%, and the tax rate is 30%. 6 7 Source 8 9 Amount ($) Relative Amount (%) Pre-Tax Cost Post-Tax Cost Weighted Cost 75% 25% 750,000 250,000 1,000,000 30% 5% 10% WACC 0 Bank Equity 12 Total Corp Tax Rate 14 5 ROI 6 WACCH 172 18 19 20 21 22 23 25 26 27 28