Firms tax rate is 35% and the risk free rate is 4%

4 pts Use the following information to answer questions 23-25. Consider the following capital structure for ABC Corporation. The company has a floating-rate bank loan, preferred shares, and common equity in its capital structure. The firms tax rate is 35%. The risk-free rate is 4%. Details on the components of the capital structure are listed below. Debt: Short-term, variable-rate bank loan $120 million par Remaining maturity of 2 years Bonds rate was recently reset to market yield of 5%; So, now priced at par (market value = $120 million) Preferred equity: $100 million par 8% annual coupon Each $1,000 par issue is currently priced at $1,050. Common equity: 5 million shares outstanding Current share price: $50 Stock beta: 1.2 Market risk premium = 8.5% What is ABCs cost of preferred equity? Group of answer choices 7.62% 8.00% 8.40% 12.00% Flag this Question Question 24 4 pts Use the following information to answer questions 23-25. Consider the following capital structure for ABC Corporation. The company has a floating-rate bank loan, preferred shares, and common equity in its capital structure. The firms tax rate is 35%. The risk-free rate is 4%. Details on the components of the capital structure are listed below. Debt: Short-term, variable-rate bank loan $120 million par Remaining maturity of 2 years Bonds rate was recently reset to market yield of 5%; So, now priced at par (market value = $120 million) Preferred equity: $100 million par 8% annual coupon Each $1,000 par issue is currently priced at $1,050. Common equity: 5 million shares outstanding Current share price: $50 Stock beta: 1.2 Market risk premium = 8.5% Using CAPM, what is ABCs cost of common equity? Group of answer choices 8.50% 10.20% 12.50% 14.20% Flag this Question Question 25 4 pts Use the following information to answer questions 23-25. Consider the following capital structure for ABC Corporation. The company has a floating-rate bank loan, preferred shares, and common equity in its capital structure. The firms tax rate is 35%. The risk-free rate is 4%. Details on the components of the capital structure are listed below. Debt: Short-term, variable-rate bank loan $120 million par Remaining maturity of 2 years Bonds rate was recently reset to market yield of 5%; So, now priced at par (market value = $120 million) Preferred equity: $100 million par 8% annual coupon Each $1,000 par issue is currently priced at $1,050. Common equity: 5 million shares outstanding Current share price: $50 Stock beta: 1.2 Market risk premium = 8.5% ABCs weighted average cost of capital is closest to: Group of answer choices 8.77%. 9.98%. 10.06%. 10.42%.