Assume perfect capital markets. All payments occur at year end. 
The company ABC is financed by $200 in debt and $800 in equity. Company ABC’s cost of debt is 
5% and its cost of equity is 10%. 
a) How does the assumption about “perfect capital markets” influence company ABC’s 
weighted average cost of capital (WACC)? What is company ABC’s WACC? The word "capital" should not appear in your response.
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