Calculate abc wacc

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ABC Inc. has 1,800 shares outstanding at $40 per share. Dividend is expected to be $3 per share in year 1 and to grow at 3% per year. ABC has two outstanding bonds. The first one has $15,000 face value, 6.5% coupon (paid semi-annually), 16 years of maturity, and price of 92.52 (92.52% of face value). The second one has $18,000 face value, 7% coupon (paid semi-annually), 25 years of maturity, and yield to maturity of 8.2%. ABC has a 30% tax rate.

-Calculate ABC's WACC.

-If ABC changed its capital structure to the industry's average debt-to-asset ratio of 0.45, what would the WACC be if its cost of debt remained unchanged?

Reference no: EM133070358

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