Sam Jones Has an Engineering Firm

question 44

Multiple Choice

Sam Jones has an engineering firm. He wants to build a new headquarters building. The building will cost $1,500,000. He will put down $450,000 and have a bank finance the remainder at prime plus 2 percent. The prime lending rate is currently 8.5 percent. Sam will withdraw the money for the down payment from his mutual fund account where he has earned 13 percent for the last ten years. What is Sam's weighted average cost of capital?

• A) 11.25%
• B) 13.00%
• C) 10.5%
• D) 8.5%

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Definitions:

Convulsion

An abrupt, involuntary muscle contraction often associated with a sudden electrical discharge in the brain, leading to uncontrolled body movements.

Brain Malfunctions

Disorders or dysfunctions in the brain leading to various symptoms like memory loss, impaired judgement, or physical impairments.

Involuntary Contractions

Muscle contractions that occur without the conscious control of the person, such as muscle spasms or reflex actions.

Medical Emergencies

Situations requiring immediate medical attention due to a sudden injury or illness that poses an immediate risk to life or health.