ABC Mining is reviewing the purchase of a new machine. Their capital structure consists of: $4 milli

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ABC Mining is reviewing the purchase of a new machine. Their capital structure consists of: $4 million in loans at a stated rate of 5%, $6 million in bonds that sold at par for $1000 (flotation costs were $20 per bond, coupon rate 5.6%, 10 years to maturity) $10 million in common stock with the most recent dividend of $1.20, growth rate of 5%, current stock price of $35. 40% tax rate.

a. The cost of loan debt is 3%. true or false?

b. The cost of equity is 8.43%. true or false?

c. What is their WACC? take to the hundredth