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Weighted average cost of capital-abc inc

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ABC Inc.'s wants to fund a $5 million investment by using its $3 million of retained earnings and borrowing $2 million. ABC Inc.'s common shareholders received a $2 per share dividend last year and analysts predict that dividends will continue to grow at a rate of 5 percent into the foreseeable future. The most recent closing price of ABC Inc.'s is $70. Furthermore, the firm's chief financial officer has determined that a 14-year maturity bond with a $1,000 face value and 9 percent coupon can be sold to investors for net proceeds of $897. If the ABC Inc.'s tax rate is 23 percent, What is the firm's weighted average cost of capital?

Reference no: EM132504531

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