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# &quot;Exercise.3 Daniel and Evelyn are considering buying a house valued at \$250,000. They have combined savings of \$20,000, and the bank approved a...

"Exercise.3
Daniel and Evelyn are considering buying a house valued at \$250,000. They have combined savings of \$20,000, and the bank approved a \$200,000 second mortgage. Also, Daniel has just won \$10,000 from a lottery. If Daniel and Evelyn invested their money in guaranteed certicates, they would be able to earn 4%. The interest rates offered by the bank are 6% for the first mortgage and 7% for the second.
Question
On the basis of the information, calculate Daniel and Evelyn’s cost of capital.

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