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C) Calculate the weighted average cost of capital (WACC) for ABC Inc. if the corporation wants to finance using new common equity. (3 marks) D)

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C) Calculate the weighted average cost of capital (WACC) for ABC Inc. if the corporation wants to finance using new common equity. (3 marks) D) Ir the corporation has an investment projects with a return of 10.5%, should it invest in that project or not. Explain your answer. (2 marks) In year 2015, ABC Inc. has the following capital structure: Type of Financing Bonds Characteristics Coupon interest rate: NO INTEREST (ZERO- COUPON) Market price: SR375 Par Value:SR1,000 Maturity: 10 years Tax bracket: 35% Total Market Value: SR375,000 Dividend: SR2.15 Market price: SR20 Total Market Value: SR210,000 Dividend paid last year: SR4.50 Market price: SR35 Dividend growth: 6% Total Market Value: SR415,000 Preferred Stock Common Stock The corporation has decided to expand by selling more common stock. Based on the information in the table above

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