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1-Calculate the Weighted Average Cost of Capital (WACC) for the following capital structure: 4,000 bonds with par value of $2,000 and market value of $1,800.
1-Calculate the Weighted Average Cost of Capital (WACC) for the following capital structure:
- 4,000 bonds with par value of $2,000 and market value of $1,800. The coupon of 10% with a tax rate of 50%.
- 400,000 common shares with par value of $70 per share and market value of $76 per share. The cost of common shares is 24%.
- 20,000 preferred shares with par value of $200 per share and market value of $200 per share. The dividend per share equal to $24.
2-ABC Company currently pays a $3 common stock dividend. The dividend is expected to remain at $3 and not expected to grow in the future. What is the fair value of the common stock to an investor requiring an 8% rate of return?
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