Question: Weighted Average Cost of Capital Tom and Rita are considering buying a house at a cost of $695,000. They have a combined savings of $185,000, and the bank approved a $370,000 first mortgage. Tom's fatheragreed to provide them with a $105,000 loan. Also, Rita recently won a raffle for $35,000. If Tom and Rita invested their money, they could earn 4.9%. Bank of Nova Scotia has offered an interest rate of 5.95% on the first mortgage. Tom's father agreed to lend the money at a rate of 5.0%. Required: Calculate Tom and Rita's weighted average cost of capital. Show your calculations. Round to 2 decimal places. Solution