Corporate Finance Assignment/ Professional Essay Writers
Assume the market value of ABC's common stock, preferred stock, and debt are$7 million, $3 million, and $10 million, respectively. ABC has a beta of 1.5, the market risk premium is 7%, and the risk-free rate of interest is 2.5%. ABC's preferred stock pays a dividend of $5 each year and trades at a price of $25 per share. ABC's debt trades with a yield to maturity of 7.0%. What is ABC's weighted average cost of capital if its tax rate is 35%?
b- Now you need to decide whether you should invest in project delta, you are given that the project’s IRR is equal to 6.5%. should you invest in project delta? Why or why not? Get Finance Help Today