Veighted average cost of capital Personal Finance Problem John Dough has just been awarded his degree in business. He has three education loans outstanding. They all mature in 5 years and he can repay them without penalty any time before maturity. The amoun wed on each loan and the annual interest rate associated with each loan are given in the following table: ohn can also combine the total of his three debts (that is, $64,000) and create a consolidated loan from his bank. His bank will charge an annual interest rate of 6.3% for a period of 5 years. Should John do nothing (leave the three individual loans as is) or create a onsolidated loan (the $64,000 question)?
Veighted average cost of capital Personal Finance Problem John Dough has just been awarded his degree in business. He has three education loans outstanding. They all mature in 5 years and he can repay them without penalty any time before maturity. The amoun wed on each loan and the annual interest rate associated with each loan are given in the following table: ohn can also combine the total of his three debts (that is, $64,000) and create a consolidated loan from his bank. His bank will charge an annual interest rate of 6.3% for a period of 5 years. Should John do nothing (leave the three individual loans as is) or create a onsolidated loan (the $64,000 question)?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Weighted average cost of capital Personal Finance Problem John Dough has just been awarded his degree in business. He has three education loans outstanding. They all mature in 5 years and he can repay them without penalty any time before maturity. The amounts
owed on each loan and the annual interest rate associated with each loan are given in the following table:
John can also combine the total of his three debts (that is, $64,000) and create a consolidated loan from his bank. His bank will charge an annual interest rate of 6.3% for a period of 5 years. Should John do nothing (leave the three individual loans as is) or create a
consolidated loan (the $64,000 question)?
The weighted average annual interest rate on John's current loan portfolio is %. (Round to two decimal places.)
Transcribed Image Text:Loan
1
2
WN
3
Balance due
$21,000
$11,000
$32,000
Annual
interest rate
5.5%
8.5%
4.5%
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