Question
Pecking order hypothesis. Ross Enterprises can raise capital from the sources in the popup window: Source of Funds Interest Rate Borrowing Limit Small business bureau
Pecking order hypothesis. Ross Enterprises can raise capital from the sources in the popup window:
| Source of Funds | Interest Rate | Borrowing Limit |
| Small business bureau | 66% | $50,000 |
| Bank loan | 99% | $40,000 |
| Bond market | 11% | $80,000 |
| Owner's equity (stock) | 15% | $90,000 |
Ross has a new project that has an estimated IRR of 88%, but will require an investment of $220,000.
Should Ross borrow the money and invest in the new project?
What is Ross's weighted average cost of capital (WACC) if it needs to raise $220,000?
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Finance For Nonfinancial Managers
Authors: Gene Siciliano
2nd Edition
0071824367, 978-0071824361
