ABC, Inc. is looking at raising additional capital for the future project. The project is expected...

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ABC, Inc. is looking at raising additional capital for thefuture project. The project is expected to provide a return oninvestment of 13%. In order for ABC, Inc. to determine whether thisproject is worth investing in, it must first determine the cost ofcapital it will use to finance the project. a. The firm's currentstock price is $45 and it has 4 million shares of stockoutstanding. The firm also has $30 million of preferred stock and$70 million of debt. Calculate the weights of each capitalcomponent. b. The firm is looking at issuing a new 30-year bondthat pays an annual coupon of 8% with a flotation cost of 2%. Thebond is expected to sell at its par value of $1000. The firm's taxrate is 40%. Calculate the ATrd. c. The firm will have to pay theunderwriter a 10% flotation cost for the new equity it will raise.The firm just paid out a dividend of $4.22 with an expected growthrate of 4.5%. Calculate the re d. The firm expects its preferredstocks to sell for $112.55. The par value of the preferred stockwill be $100 with a 12% annual dividend. The flotation cost will bepaid to the underwriter will be 4%. Calculate the rps. e. Assumethat the firm's current market value is their target capitalstructure, what is the firm's WACC? f. Should the firm take on thisinvestment based on the cost of the capital that it will use tofund the project? Why?

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All financials below are in mn a The firms current stock price is 45 and it has 4 million shares of stock outstanding The firm also has 30 million of preferred stock and 70 million of debt Calculate the weights of each capital component Common equity E Price x nos of shares outstanding 45 x 4 180 Preferred stock P 30 D 70 Total capital T E P D 180 30 70 280 Weight of equity We E T 180 280 6429 Weight of See Answer

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ABC, Inc. is looking at raising additional capital for thefuture project. The project is expected to provide a return oninvestment of 13%. In order for ABC, Inc. to determine whether thisproject is worth investing in, it must first determine the cost ofcapital it will use to finance the project. a. The firm's currentstock price is $45 and it has 4 million shares of stockoutstanding. The firm also has $30 million of preferred stock and$70 million of debt. Calculate the weights of each capitalcomponent. b. The firm is looking at issuing a new 30-year bondthat pays an annual coupon of 8% with a flotation cost of 2%. Thebond is expected to sell at its par value of $1000. The firm's taxrate is 40%. Calculate the ATrd. c. The firm will have to pay theunderwriter a 10% flotation cost for the new equity it will raise.The firm just paid out a dividend of $4.22 with an expected growthrate of 4.5%. Calculate the re d. The firm expects its preferredstocks to sell for $112.55. The par value of the preferred stockwill be $100 with a 12% annual dividend. The flotation cost will bepaid to the underwriter will be 4%. Calculate the rps. e. Assumethat the firm's current market value is their target capitalstructure, what is the firm's WACC? f. Should the firm take on thisinvestment based on the cost of the capital that it will use tofund the project? Why?