Company ABC has 80,000 bonds outstanding that are selling at par value and have a...
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Finance
Company ABC has 80,000 bonds outstanding that are selling at par value and have a yield to maturity of 8.5%. The company also has 4 million shares of common stock outstanding. The stock has a beta of 1.1 and sells for $40 a share. The U.S. Treasury bill is yielding 4% and the market risk premium is 8%. ABC's tax rate is 35%. What is ABC's weighted average cost of capital (WACC)?
A.
7.39%
B.
11.65%
C.
7.10%
D.
10.38%
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