1. ABC Corp.s capital structure includes: (i) an issuance of $55 million of bonds due March 1, 2027, with a coupon rate of 5.5%, semi-annual interest payments, and a current price of 96; and (ii) 5 million shares of common stock, which are trading at $11 per share. ABCs balance sheet shows $5 million of cash and cash equivalents and $45 million of stockholders equity. According to Yahoo Finance, the Beta for ABC shares is 1.3, the risk-free rate is 4% and the equity risk premium is 6%. ABCs tax rate is 20%.

a. Show a simple balance sheet for ABC based on this information:

b. What is ABCs WACC? Show how you derived it.