ABC Company Has a Capital Structure with Debt and Equity

question 4

Essay

ABC company has a capital structure with debt and equity.Debt - $50 million face value bonds maturing in 15 years with a coupon rate of 4% paid semi-annually.Similar bonds are selling at 97.5.Equity - There are 2,000,000 shares outstanding.The investor's return is 10%.The next dividend is $3.5 with a growth rate of 4% into the future.Tax rate is 30%.Given the following information, calculate its WACC.

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Definitions:

Ethical Intensity

indicates the degree to which an issue or situation is recognized as having ethical implications that affect its stakeholders.

Confirmation Bias

The tendency to search for, interpret, favor, and recall information in a way that confirms one's preexisting beliefs or hypotheses.

Temporal Immediacy

The degree of immediacy or urgency associated with a task or situation, often affecting decision-making processes.

Distributive Justice

The perceived fairness of the allocation of resources, rewards, or outcomes within an organization or society.