ABC Inc. has 25 million shares outstanding trading at $18 per share. Going forward, the market expects ABC to pay an annual dividend of $1.80 per share. ABC also has $150 million in outstanding debt in the form of bonds. These annual bonds have a face value of $1000, a coupon rate of 7%, have 5 years to maturity, and are trading at $1042.12. What is the unlevered cost of capital of ABC?

Answer rating: 100% (QA)

The unlevered cost of capital of a company is the cost of the companys capital if it had no debt To ... View the full answer