What is marys before-tax cost of capital

Reference no: EM13700826

Mary has borrowed $125,000 at 8% from her parents. She is asking Kevin for $75,000 to start her own business. Kevin requires that the business make a 12% rate of return.

a) What is Mary's before-tax cost of capital?

b) If Mary has to pay 30% taxes, what is her cost of capital AFTER taxes?

c) Mary has to set her MARR. Her business competes with Apple. Which of the following is the best choice for her MARR?

i) 10%

ii) 20%

iii) 25%

iv) 35%

Reference no: EM13700826

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