Question 6 (1 point) D E F 1001 900 200 800 500 1 Calculation of weighted Average Cost of Capital (WACC) 2 3 Balance Sheet (Book Value) 4 Asset Liability 5 Current 500 Current 6 Long-term 2000 7 Long-term Debt 8 9 Preferred Equity 10 Common Equity 11 Reteained Earnings 12 Total 2500 Total 13 14 Individual Cost of Capital (Pre-Tax) 15 Cost of Long-term Debt 8961 16 Cost of Preferred Equity 10% 17 Cost of Common Equity 12% 18 Tax Rate 30% 19 There is no flotation cost 20 21 Weighted Average Cost of Capital (WACC): 22 23 The appropriate formula to calculate WACC in cell E21 is: 2500 =C15*(1-C18)*E7/SUM(E7:E10)+C16*E9/SUM(E7:E10)+C17* (E10)/SUM(E7:E10) No correct answer option is given =C15*(1-C18)*E7/SUM(E7:E11)+C16*E9/SUM(E7:E11)+C17* (E10+E11)/SUM(E7:E11) O=C15*(1-C18)*E7/SUM(E7:E11)+C16(1-C18)*E9/SUM(E7:E11)+C17*(1-C18)* (E10+E11)/SUM(E7:E11) =C15*(1-C18)*E7/SUM(E7:E11)+C16*E9/SUM(E7:E11)+C17* (E10)/SUM(E7:E11) Question 7 (1 point) E F H B G 1 You have borrowed $20,000 from a Bank and are required to make monthy interest payments. 2 3 Annual interest rate (without compounding) is: 18% 4 Number of months in a year: 5 The loan is for the period of (in months): 6 7 Your effective annual interest rate (EAIR) is: 8 9 The appropriate formula for EAIR in cell F7 is: 10 12 6 No correct answer option is given = (1+F3/F4)^F4 =(1+F3/F4)^F4-1 ^ =(1+F3/F5)^F5-1 O=(1+F3/F5)^F4-1