Alloy Supply Co

question 21

Multiple Choice

Alloy Supply Co.has a new project that will require the company to borrow $3,000,000.Acme has made an agreement with three lenders for the needed financing.First National Bank will give $1,500,000 and wants 6% interest on the loan.Banner Bank will give $1,000,000 and wants 9% interest on the loan.Western National Bank will give $500,000 and wants 7% interest on the loan.What is the weighted average cost of capital to acquire the $3,000,000?

• A)8.17%
• B)11.17%
• C)7.33%
• D)7.17%

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Definitions:

Preparation Sequencing

The organized planning and arrangement of tasks or activities to achieve a desired goal or outcome.

Budgeted Balance Sheet

A projection of a company's financial position at a specific future date, based on expected income, expenses, and changes in assets and liabilities.

Sales Budget

A financial plan that estimates future sales, either in units or monetary value, over a specific period, aiding management in decision-making and resource allocation.

Cash Balance

The amount of cash or cash equivalents a company or individual holds, reflecting the liquidity available for use.