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CFA Level 1
Corporate Finance

Calculating WACC for ABC Corporation

Hard Cost Of Capital Weighted Average Cost Of Capital

ABC Corporation is evaluating its overall cost of capital to assess its investment strategy. The firm has a debt-to-equity ratio of 60%. The cost of equity is estimated at 10%, and the after-tax cost of debt is 4%. ABC Corporation's total debt is $600,000 and total equity is $400,000. Based on this information, what is ABC Corporation's weighted average cost of capital (WACC)?

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% Correct60%