Question: I2 At 2020 AAB Construction has a face debt value of 30M trading at 71% with a pre-tax weighted cost of 3 %. AAB common

At 2020 AAB Construction has a face debt value of 30M trading at 71% with a pre-tax weighted cost of 3 %. AAB common equity for the year was valued at 25M and preferred equity for 5M. AAB Construction issues preferred dividends at an annual rate of $6. Its current preferred stock price is $30 Assume that the equity beta for AAB Construction is 1.1. The Yield on 10-year treasuries is 4%, and that the market risk premium for the year is 12%. The company's EPS expected growth is 7%. For this year, the dividends for AAP Construction are the same for common and preferred stock; additionally, the price for common stock is $25. If the tax rate is 23%, 1. a) What is AAB Construction WACC if CAPM is used 2. b) What is AAB Construction WACC if CDGM is used

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