A public university wantsto applythe conceptof theWACC to
Chapter , Problem 15-8(choose chapter or problem)
A public university wantsto applythe conceptof theWACC to developing its interest rate for analyzingcapital projects. It has an endowment of $68 millionwhich is earning 6.3% interest. It is paying 4.5%interest on $29 million inbonds.It believes that $94million in general funds from the taxpayers shouldbe assigned an interest rate of 13%. What is theuniversitys cost of capital? Note that only the inter-est on the endowment is available to fund capitalprojects.
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