Gce Model Questions Vol1 2022 Commerce Question 30
Practice objective / multiple choice question 30 from the 2022 Gce Model Questions Vol1 Commerce examination.
A small manufacturing firm wishes to raise ₦10 million. It can obtain a bank loan of up to ₦4 million at an interest rate of \(12\%\) per annum (interest is tax‑deductible, corporate tax rate \(30\%\)). Any remaining amount will be raised by issuing new equity at a cost of \(18\%\) (no tax shield). The firm wants its weighted average cost of capital (WACC) to be no more than \(15\%\). What is the minimum amount of the bank loan (in naira) that the firm must obtain to meet this target?
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About This Question
This is Gce Model Questions Vol1 2022 Commerce Question 30. It is one of the objective questions from the 2022 Gce Model Questions Vol1 Commerce examination.
Difficulty level: Medium .
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