Calculate the Weighted Avg Cost of Capital, using the following Data:

ABC CORPORATION DATA FOR THE YEAR 2014

1 LT DEBTS (LTD)

Bonds:8% Bonds with remaining maturity of 10 years currently selling in the market

for 112.75. No of Bonds Outstanding = 5 milliion.

NOTE: BOND PRICES IN THE BOND MKT ARE QUOTED IN % OF $1,000

2 Stockholders Equity (SHE)

Pf Stock 7% pf Stock currently selling in the Market a Price of $ 115.00 each

No of Pf Stock Outstanding = 10 million

Common Stock: Current Market Price $ 60.20. No of Common shares outstanding = 75 million

Risk free Rate of Return =5% Krf

Overall Mkt Return =12% Km

Firm'S Beta Coefficient = 1.20

Hint: USE CAPM Model to Calculate Investor's requred Return = Ks

3 Marginal Tax Bracket (MTB)

ABC's MTB is = 21%

WACC is used in:

1 Setting the Minimum Discount Rate for Capital Budgeting Projects

2 It is used for Performance Evaluation of the Firm