ABC corporation's capital is composed of 30% debt and 70% equity. ABC credit rating class is BBB. Companies in this credit class has a 3% credit spread.  ABC's beta is 1.2. Equity Market Risk Premium is estimated to be 6%. 10 Year Treasury yield is 4% and ABC's corporate tax rate is 21%. Which one of the following is the best estimate of ABC's cost of capital?

Answer rating: 100% (QA)

To calculate ABC Corporations cost of capital we need to find the cost of debt and the ... View the full answer