Using the information from the table, and assuming that the risk free rate is 4 5 and the market risk premium is 6 2 , calculate Xena's cost of equity capital, using the capital asset pricing model Xena Corp Total Assets $23,610 Interest Bearing Debt (market value) $11,070 Average borrowing rate for debt 10 2 Common Equity Book Value $6,150 Market Value $25,830 Marginal Income Tax Rate 37 Market Beta 1 73 A 10 4 B 13 4 C 15 2 D 8 9

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Question: Using the information from the table, and assuming that the risk-free rate is 4.5% and the market risk premium is 6.2%, calculate Xena's cost of

Using the information from the table, and assuming that the risk-free rate is 4.5% and the market risk premium is 6.2%, calculate Xena's cost of equity capital, using the capital asset pricing model:

Xena Corp.
Total Assets	$23,610
Interest-Bearing Debt (market value)	$11,070
Average borrowing rate for debt	10.2%
Common Equity:
Book Value	$6,150
Market Value	$25,830
Marginal Income Tax Rate	37%
Market Beta	1.73

		A. 10.4%
		B. 13.4%
		C. 15.2%
		D. 8.9%

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