Problem:
Jamie's Cupcakes has a new project that will require the company to borrow $3,000,000. Jamie has made an agreement with three lenders for the needed financing. Bank 1 will give $1,250,000 and wants 11% interest on the loan. Bank 2 will give $1,500,000 and wants 13% interest on the loan. The final part of the loan comes from a guy she knows will give $250,000 and wants 19% interest on the loan.
Requirement:
Question: What is the weighted average cost of capital for this $3,000,000?
Note: Please provide equation and explain comprehensively and give step by step solution.