Suppose abcs preferred stock has a price of $20.80 and an annual dividend of $1.0325. Suppose also the common equity beta of abc is 0.75, the yield on treasury bills is 2.35%, and you estimate the market risk premium to be 6%. By using the yield to maturity on abc s debt, we found that its pre-tax cost of debt is 3.14%. In early 2020, the market values of abcs common stock, preferred stock, and debt were $48,333 million, $3,331 million, and $19,321 million, respectively. 9. If abcs tax rate is 20%, what was abcs WACC in early 2020? A. 6.8% B. 4.9% C. 5.5% D. 6.4% E. All of the above.

You are analyzing abcs potential acquision of cde. abc plans to offer $9 billion as the purchase price for cde and will need to issue additional debt and equity to finance such a large acquisition. You estimate that the issuance costs will be $350 million and will be paid as soon as the transaction closes. You also estimate that the incremental free cash flows from the acquision will be 0.4 billion in the first year and will grow at 1.5% per year thereafter. Using the WACC that you estimated for abc , what is the NPV of the proposed acquisition? A. $650 million. B. $0.76 billion. C. $0.55 billion. D. $730 million. E. none of the above.