Jensen Motorsports Has a New Project That Will Require the Company

question 78

Multiple Choice

Jensen Motorsports has a new project that will require the company to borrow $3,000,000. Jensen's has made an agreement with three lenders for the needed financing. Citizens' Bank will give $1,500,000 and wants 10% interest on the loan. Visitors' Bank will give $1,000,000 and wants 12% interest on the loan. Peoples' Bank will give $500,000 and wants 13% interest on the loan. What is the weighted average cost of capital for this $3,000,000?

• A) 10.55%
• B) 11.17%
• C) 11.66%
• D) 12.16%

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