1. Match the Weighted Average Cost of Capital to each of the scenarios given for ABC Corporation.

-A.B.C.D.E.	Target capital structure: 47% debt, 8% preferred stock and 45% common equity. Yield to maturity on bonds: 8.0%; Preferred stock dividend: $6.40 per year; current market price of preferred stock is $68.90. CAPM data for common equity: risk-free rate is 3.0%; market risk premium for the average stock is 8.0%; ABC has a beta of 1.13. ABC's marginal tax rate is 40%.
-A.B.C.D.E.	Target capital structure: 51% debt, 5% preferred stock and 44% common equity. Yield to maturity on bonds: 5.2%; Preferred stock dividend: $7.04 per year; current market price of preferred stock is $69.54. CAPM data for common equity: risk-free rate is 4.9%; market risk premium for the average stock is 6.3%; ABC has a beta of 1.32. ABC's marginal tax rate is 40%.
-A.B.C.D.E.	Target capital structure: 51% debt, 8% preferred stock and 41% common equity. Yield to maturity on bonds: 7.0%; Preferred stock dividend: $6.97 per year; current market price of preferred stock is $69.47. CAPM data for common equity: risk-free rate is 4.0%; market risk premium for the average stock is 4.1%; ABC has a beta of 2.22. ABC's marginal tax rate is 40%.
-A.B.C.D.E.	Target capital structure: 52% debt, 6% preferred stock and 42% common equity. Yield to maturity on bonds: 7.1%; Preferred stock dividend: $7.22 per year; current market price of preferred stock is $69.72. CAPM data for common equity: risk-free rate is 3.9%; market risk premium for the average stock is 7.6%; ABC has a beta of 1.26. ABC's marginal tax rate is 40%.
-A.B.C.D.E.	Target capital structure: 38% debt, 6% preferred stock and 56% common equity. Yield to maturity on bonds: 4.3%; Preferred stock dividend: $7.27 per year; current market price of preferred stock is $69.77. CAPM data for common equity: risk-free rate is 4.9%; market risk premium for the average stock is 9.7%; ABC has a beta of 0.89. ABC's marginal tax rate is 40%.

A.	8.32%
B.	9.18%
C.	7.91%
D.	8.50%
E.	8.42%