Find the cost of capital for building the sports stadium

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Problem 1: ABC inc. a listed entity wants to build a sports stadium worth $ 1 million for its local county. ABC inc. raises $ 500,000 via debt issue at a post tax cost of debt of 5%. The firm also raises $ 300,000 via equity issues. The remaining $ 200,000 is raised via donation by the community patrons. If the risk-free rate is 5%, ABC's beta is 1.2, market risk premium is 5% and tax rate is 30%, estimate the cost of capital for building the sports stadium.

Reference no: EM132714105

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