Cha Cha Corporation has three long term loans (interest bearing debt):  a loan of $100,000 at 6% interest, a loan of $100,000 at 8% interest, and a loan of $100,000 at 14% interest.  The company has accounts payable of $50,000 (non-interest bearing) and equity of $200,000.  It estimates that its cost of equity is 12%.  Its tax rate is 35%. A. What is Cha Cha Corporation’s weighted average after tax cost of interest-bearing debt? B. What is Cha Cha Corporation’s weighted average cost of capital on interest bearing debt and equity?

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