Dakota Drilling Inc

question 90

Multiple Choice

Dakota Drilling Inc.(DD) has a new project that will require the company to borrow $5,000,000.MM has made an agreement with three lenders for the needed financing.First National Bank will give $1,000,000 and wants 6% interest on the loan.Texas Bank will give $3,000,000 and wants 7% interest on the loan.Chase Bank will give $1,000,000 and wants 8% interest on the loan.What is the weighted average cost of capital for this $5,000,000?

• A)10.67%
• B)10.20%
• C)8.00.00%
• D)7.00%

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Definitions:

Too Optimistic

Characterizes a perspective or expectation that is overly positive or hopeful, often without sufficient grounding in reality.

Exact Value

The precise numerical quantity or measurement without any approximation or error.

Same for All

A condition or policy applied equally to every member of a group.

Common-value Setting

An environment in which the value of an item or resource is the same for all participants but may be unknown at the time of transaction.