ABC Property Development Company has 9.6 million shares of common stock outstanding, 400,000 shares of 6 percent $100 par value preferred stock outstanding, and 165,000 7.50 percent semi-annual bonds outstanding, par value $1,000 each. The common stock currently sells for $44 per share and has a beta of 1.30, the preferred stock currently sells for $93 per share, and the bonds have 20 years to maturity and sell for 115 percent of par. The market risk premium is 8.4 percent, T-bills are yielding 4 percent, and the company's tax rate is 40 percent.

Calculate the WACC for ABC property company.

Answer rating: 100% (QA)

To calculate the weighted average cost of capital WACC for ABC Property Development Company we need to first calculate the cost of each component of the capital structure and then weight them based on ... View the full answer