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ACC - ABC Company

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Question;The following financial statement data pertains to ABC Company (dollar amounts in millions):Total AssetsInterest-Bearing DebtAverage Pre-tax borrowing costCommon Equity:Book ValueMarket ValueIncome Tax RateMarket Equity BetaMarket PremiumRisk-free interest rate$145,782$32,6598.25%$22,515$65,84340%0.857.5%2.2%Required:a. Calculate the company's cost of equity capital using CAPM.b. Calculate the weight on debt capital that should be used to determine ABCs weighted-average cost of capital.c. Calculate the weight on equity capital that should be used to determine ABCs weighted-average cost of capital.d. Calculate ABCs weighted-average cost of capital.

 

Paper#38657 | Written in 18-Jul-2015

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