Question: Using the information from the table, determine the weight on equity capital that should be used to calculate Xena's weighted-average cost of capital: Xena Corp.

Using the information from the table, determine the weight on equity capital that should be used to calculate Xena's weighted-average cost of capital:

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.

24.0%
B.

73.8%
C.

70.0%
D.

38.7%

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