Corp. ABC is a conglomerate multi-industry company, i.e., a combination of multiple business entities operating in entirely different industries under one corporate group. Corp. ABC has 8.5 million shares of common stock outstanding, 250,000 shares of 5 percent preferred stock outstanding, and 135,000 7.5 percent semi-annual bonds outstanding, par value $1,000 each. The common stock currently sells for $34 per share and has a beta of 1.25, the preferred stock currently

sells for $91 per share, and the bonds have 15 years to maturity and sell for 114 percent of par. The market risk premium is 7.5 percent, T-bills are yielding 4 percent, and Titan Minings tax rate is 35 percent.

a.) What is the firms market value capital structure?

b.) What is WACC of Corp. ABC?

c.) Assume there are two projects from two different segments. Should the financial manager

use the overall firm WACC as the hurdle rate to evaluate these two project? Explain.