Exercise 1 ( use excel formulas and show steps)

ABC company has the following information related to its capital structure.

• Total debt on its balance sheet - $200,000
• Total preferred stock on its balance sheet - $100,000
• Total common stock on its balance sheet - $200,000
• The interest debt on the debt is 8%
• The interest rate on the preferred stock is 10%
• The expected rate of return on the companys common stock is 14%
• ABCs tax rate is 35%

Requirements

Calculate ABC Companys weighted average cost of capital.