ABC Inc.'s capital structure is 40% debt, 30% preferred, and 30% common equity, and its tax rate is 35%. For financing, (a) ABC sold a non-callable bond several years ago that now has 15 years to maturity with 8% annual coupon, paid semiannually, at a price of $1,055, and a par value of $1,000. (b) ABC sold a perpetual preferred stock for $95.50 per share, with a $7.50 annual dividend and a flotation cost of 3.00% of the price. (c) ABC also has beta = 1.2, risk free rate of return r_RF = 6.00%; market risk premium RP_M = 7.00%;

What is the company's WACC? (Show all work)

Answer rating: 100% (QA)

To calculate ABC Incs weighted average cost of capital WACC we need to calculate the cost of each component of its capital structure and then take a w... View the full answer