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need B & C :) You need to calculate the ABC Corporation's cost of debt, cost of equity, and WACC. Here's what's known: ABOUT THE

need B & C :)
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You need to calculate the ABC Corporation's cost of debt, cost of equity, and WACC. Here's what's known: ABOUT THE MARKET: The expected return on the market portfolio is 10 percent. Treasury bills offer a 3.5 percent annual return. ABOUT THE "ABC CORPORATION": It's a levered firm. (If it did not have debt, the Beta of its equity would have been 1.05.) Its target debt-to-equity ratio is 70 and it would like to maintain this ratio in the future. This firm has debt that matures in 28 years, has a $2,000 par value (per bond), and the coupon rate of 6.2 percent. Semiannual coupon payments are required until the debt matures. Today's price of each bond is $2,110. The firm pays taxes according to an income tax rate of 21 percent. a. ABC's cost of debt (HINT: "annual yield to maturity") equals: (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. ABC's cost of equity equals: (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) C. ABC's WACC (TIP: if you're unsure how to go from "debt-to-equity ratio" to "weight of debt" and "weight of equity", watch my short video https://youtu.be/BAipMtb6N9K) equals: (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. % b. Cost of debt Cost of equity WACC 5.80 13.59 X % 9.88 % X X C

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