Question: Using the information from the table, determine the weight on debt 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 debt 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. 26.2% | ||
| B. 30.0% | ||
| C. 50.0% | ||
| D. 61.3% |
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