Question
ABC Inc.'s wants to fund a $6 million investment by using its $ 4 million of retained earnings and borrowing $2 million. ABC Inc.'s common
ABC Inc.'s wants to fund a $6 million investment by using its $ 4 million of retained earnings and borrowing $2 million. ABC Inc.'s common shareholders received a $4 per share dividend last year and analysts predict that dividends will continue to grow at a rate of 4 percent into the foreseeable future. The most recent closing price of ABC Inc.'s is $63. Furthermore, the firm's chief financial officer has determined that a 11-year maturity bond with a $1,000 face value and 7 percent coupon can be sold to investors for net proceeds of $888. If the ABC Inc.'s tax rate is 23 percent, what is the firm's weighted average cost of capital?
Group of answer choices
8.35222 %
8.81623 %
7.8882 %
9.28024 %
10.2083 %
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