Question
ABC Corporation operates as a retailer in North America and internationally. The Company serves customers through retail sites such as ABC.com which primarily includes merchandise
ABC Corporation operates as a retailer in North America and internationally. The Company serves customers through retail sites such as ABC.com which primarily includes merchandise and content purchased for resale from vendors and those offered by thrid party sellers. Assume that ABC corp. has the following capital structure:
Debt = $20,000,000
Preferred Stock= $10,000,000
Equity (C/S)= $ 70,000,000
Total Capital Venture of Firm $100,000,000
Assume that the required rate of return on equity is 14.8% ABCs debt is currently yielding 10% and its preferred stock is yielding 10.66% ABC Corp has a 34% marginal Tax Rate
Compute ABCs Weighted Average Cost of Capital (WACC) (as a %)
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