1) Mary Carey, a clever 3360 student, has borrowed $125,000 at 8% from her parents. She is asking Dragon Kevin for $75,000 to start her own business. Kevin requires that the business make a 12% rate of return. If they both agree, what is Mary's before-tax cost of capital? Answer as a number like 12.3 which means 12.3%
1) If Mary has to pay 30% taxes, what is her cost of capital AFTER taxes? Answer as above.
2) Mary has to set her MARR. Her business competes with Apple. Which of the following is the best choice for her MARR? ( 10%, 20% , 25% , 35 %)