An important retail company in Mexico will carry out a project that requires an initial investment of $2,000 million pesos. Your Council of Administration authorized to finance the project with the following Structure of
Capital:
Bond issue: 50%
Bank Credit: 30%
Own Capital: 20%
Data:
Coupon face value, term and rate: $1,000, 10 years and 12%
Float Cost: 4%
Coupon starting price: $930
Bank Credit Rate: 18%
Financing cost of Retained Earnings: 6%
Determine the AVERAGE COST OF CAPITAL
WEIGHTED of the project