Question: a. ABC, Inc.'s target capital structure is 30% debt, 45% preferred, and 25% common equity. The before-tax cost of debt (RD) is 5.79%, the cost

a. ABC, Inc.'s target capital structure is 30% debt, 45% preferred, and 25% common equity. The before-tax cost of debt (RD) is 5.79%, the cost of preferred stock (RP) is 11.75%, and the cost of common stock (RE) is 20.6%. If the tax rate is 20%. What is the WACC?

b. ABC, Inc., has 1,162 shares of common stock outstanding at a price of $281 a share. They also have 1,392 shares of preferred stock outstanding at a price of $80 a share. There are 121 bonds outstanding that are priced at $995. What is the weight of the common stock in the capital structure?

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