Question

Company ABC is a large publicly traded firm, a market leader in producing self-driving agricultural machines. The company is boking at setting up a manufacturing
plant overseas to produce a new line of self-driving tractors. This will be a four-year project. The plant and equipment wil[cost $100 müfion to build. The marketÜ
data on ABC's securities is the following:
Debt:
579259 5.6 percent coupon bonds outstanding, 20 years to maturity, selling for $1080 each; the bonds have a par value eåch and:makétz—
semiannual payments. The YTM of the bonds is 4.96 percent.
Common stock: 21777779 shares outstanding, selling for $56 per share; the beta is
Preferred stock 7322958 shares of preferred stock outstanding, promising $3 per share dividend, selling for $85 per share.
Market
7 percent expected market risk premiun13 percent risk-free rate
ABC faces 8 percent floatation costs of new common stock issues, 6 percent on new preferred stock issues, and 4 percent on new debt issues. ABCs tax rate is
30 percent
Calculate the after-tax cost of debt.

Calculate the weighted average cost of capital WACC
Express your answer as a percent.
Answer