2. ABC Ltd. is in both computer hardware and software business, with 75% in hardware and 25% in software business. It has a 35% tax rate and the following capital structure. To strengthen its software business, ABC is considering a capital project to acquire a software only company that has a WACC of 12%. (a) Calculate the WACC for ABC (b) Should ABC plans to use its WACC to evaluate the capital project above? Why or why not? Long-term Bonds Preferred Shares Common Shares Book Value 19,500,000 8,000,000 6,500,000 Coupon/Preferred dividend Rate 5% 5% N/A Market Value 20,000,000 10,000,000 50,000,000 Market Rate of Return 6% 8% 12%