(Weighted average cost of capital) ABBC Inc. operates a very successful chain of yogurt and coffee shops spread across the southwestern part of the United States and needs to raise funds for its planned expansion into the Northwest. The firm's balance sheet at the close of 2015 appeared as follows: At present, the firm's common stock is selling for a price equal to 3 times its book value, and the firm's investors require a return of 15 percent. The firm's bonds command a yield to maturity of 11 percent, and the firm faces a tax rate of 32 percent. At the end of the previous year, ABBC's bonds were trading near their par value. a. What does ABBC's capital structure look like? b. What is ABBC's weighted average cost of capital? c. If ABBC's stock price were to rise such that it sold at 3.5 times its book value and the cost of equity fell to 12 percent, what would the firm's weighted average cost of capital be (assuming the cost of debt and tax rate do not change)? i - X Data Table Cash Accounts receivable Inventories $ 1,740,000 4,470,000 1,820,000 32,334,000 Long-term debt $ 8,447,000 31,917,000 Net property, plant, and equipment $ 40,364,000 Common equity Total debt and equity Total assets $ 40,364,000