The ABC Corporation has $300,000 of retained earnings available at a cost (kr) of 13%. If it exhausts retained earnings, it must use new common stock at a cost (kn) of 14%. Additionally, the firm expects it can raise up to $400,000 of long-term debt at a cost(ki) of 5.6%; any further use of debt will be at a cost of 8.4%. The firm can issue an unlimited number of shares of preferred stock at a cost (kp) of 10.6%. The target capital structure is 40% L-T debt, 50% common equity, and 10% preferred stock. ABC’s breaking points for WACC calculation is:A) $600,000B) $1,000,000C) $700,000D) Both A & B are correctE) None of the Above

Suppose that xtel currently is selling at $40 per share. you buy 500 shares using $15,000 of your own money, borrowing the remainder of the purchase price from your broker. the rate on the margin loan is 8%. a. what is the percentage increase in the net worth of your brokerage account if the price of xtel immediately changes to (a) $44; (b) $40; (c) $36? (leave no cells blank - be certain to enter "0" wherever required. negative values should be indicated by a minus sign. round your answers to 2 decimal places.) b. if the maintenance margin is 25%, how low can xtel’s price fall before you get a margin call? (round your answer to 2 decimal places.) c. how would your answer to requirement 2 would change if you had financed the initial purchase with only $10,000 of your own money? (round your answer to 2 decimal places.) d. what is the rate of return on your margined position (assuming again that you invest $15,000 of your own money) if xtel is selling after one year at (a) $44; (b) $40; (c) $36? (negative values should be indicated by a minus sign. round your answers to 2 decimal places.) e. continue to assume that a year has passed. how low can xtel’s price fall before you get a margin call? (round your answer to 2 decimal places.)