I need the answer for question 6 please

O) A stock has a bete of 1.2 and an expected mobil If a portfolio of the two sets has both of 2.4, what are the portfolio weights? How do you interpret the weights for the two assets in this case? Explain. (muchos) 5) ABC Inc. has the following information. Find the WACC. (10 marks) Tax rate=37%; Marbat: 8% market risk premium and 3.5% risk-frco mate. Common stock 500,000 shares outstanding, selling for $65 per share; the beta a 1.25. Det: 10,000 5.8% coupon bonds outstanding, $1,000 par valuu, 28 years to maturity, selling for 110% of par, the bonds make semi-annual payments. Preferred stock: 25,000 shares of 3.2% preferred stock outstanding, currently selling for $75 per share. 6) a) Clearly explain how you could use the "Pecking Order Theory in your personal lives. (3 marks) b) ABC Inc. expects its EBIT to be $75,000 every year forever. The firm can borrow at 8%. ABC Inc. currently has no debt, and its cost of equity is 12%. If the tax rate is 38% and ABC Inc. borrows $130,000 and uses the proceeds to repurchase shares. i) What is the WACC? (5 marks) ii) What are the implications for ABC Inc.'s capital structure decision? (2. marks) O) A stock has a bete of 1.2 and an expected mobil If a portfolio of the two sets has both of 2.4, what are the portfolio weights? How do you interpret the weights for the two assets in this case? Explain. (muchos) 5) ABC Inc. has the following information. Find the WACC. (10 marks) Tax rate=37%; Marbat: 8% market risk premium and 3.5% risk-frco mate. Common stock 500,000 shares outstanding, selling for $65 per share; the beta a 1.25. Det: 10,000 5.8% coupon bonds outstanding, $1,000 par valuu, 28 years to maturity, selling for 110% of par, the bonds make semi-annual payments. Preferred stock: 25,000 shares of 3.2% preferred stock outstanding, currently selling for $75 per share. 6) a) Clearly explain how you could use the "Pecking Order Theory in your personal lives. (3 marks) b) ABC Inc. expects its EBIT to be $75,000 every year forever. The firm can borrow at 8%. ABC Inc. currently has no debt, and its cost of equity is 12%. If the tax rate is 38% and ABC Inc. borrows $130,000 and uses the proceeds to repurchase shares. i) What is the WACC? (5 marks) ii) What are the implications for ABC Inc.'s capital structure decision? (2. marks)