Company ABC's book value of capital is as follows: Debt $700,000; Pref Stock $120,000; Common Stock $252,000. The market value of Company ABC's capital is: Debt $700,000; Pref Stock $225,000; Common Stock $650,000. Company ABC's after-tax cost of debt is 4.6%, preferred stock has required return of 6.5% and common stock has a required return of 11.6%. What is ABC's weighted average cost of capital? O 7.8% It can not be determined without knowing the tax rate 10.0% 7.6%

Company ABC's book value of capital is as follows: Debt $700,000; Pref Stock $120,000; Common Stock $252,000. The market value of Company ABC's capital is: Debt $700,000; Pref Stock $225,000; Common Stock $650,000. Company ABC's after-tax cost of debt is 4.6%, preferred stock has required return of 6.5% and common stock has a required return of 11.6%. What is ABC's weighted average cost of capital? O 7.8% It can not be determined without knowing the tax rate 10.0% 7.6%

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter14: Long-term Liabilities: Bonds And Notes

Section: Chapter Questions

Problem 1PEA

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