Sam Jones Has an Engineering Firm

question 62

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 $1,050,000 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) 10.5%
• B) 11.25%
• C) 8.5%
• D) 12.25%

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Definitions:

Legal Sanity

A legal determination that an individual understands the difference between right and wrong and can comprehend the consequences of their actions.

Morally Wrong

Actions or decisions that are considered unethical or unacceptable based on societal or personal ethical standards.

Cultural Deviance

The theory that suggests conformity to the prevailing cultural norms of lower-class society causes crime.

Intrusive Thoughts

Unwanted thoughts that are often distressing and intrude into a person’s consciousness.