Question
ABC Corp shares are currently trading at $69.25 each. The yield on the company's debt is 4% and the firm's beta is 0.25. The T-Bill
ABC Corp shares are currently trading at $69.25 each. The yield on the company's debt is 4% and the firm's beta is 0.25. The T-Bill is 4% and the expected return on the market is (E (km))11%. The company's target capital structure is 20% debt and 80% equity. The company pays a combines tax rate of 20%. The Gst rate is 13%. What is ABC's cost of equity? Using the information outlined above, calculate ABC's cost of debt (after tax). What is ABC's weighted average cost of Capital? ABC's key rival, Neil Corp has a 7 percent preferred stock outstanding that is currently selling for $48 a share. The preferred stock has a $100 per value. The market rate is 10 percent and the firm's rate is 34 percent. GST is 13%. What is Neil Corp's cost of preferred stock?
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