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| Teaching Since: | May 2017 |
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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
A couple planning for their child’s college education can fund part of or all the expected $100,000 tuition cost from their own funds (through an education IRA) or borrow all or part of it. The average return for their own funds is 7% per year, but the loan is expected to have a higher interest rate as the loan amount increases. Use a spreadsheet to generate a plot of the WACC curve with the estimated loan interest rates below and determine the best D-E mix for the couple.
|
Loan Amount, $ |
Interest Rate, % per year |
|
10,000 |
5 |
|
30,000 |
6 |
|
50,000 |
8 |
|
60,000 |
9 |
|
75,000 |
11 |
|
100,000 |
13 |
Â
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