e following data pertains to Xena Corp. Xena Corp. Total Assets $21,249 Interest-Bearing Debt (market value) $11,070 Average borrowing rate for debt 10.2% Common Equity:
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The following data pertains to Xena Corp.
Xena Corp. |
|
Total Assets |
$21,249 |
Interest-Bearing Debt (market value) |
$11,070 |
Average borrowing rate for debt |
10.2% |
Common Equity: |
|
Book Value |
$5,535 |
Market Value |
$23,247 |
Marginal Income Tax Rate |
19% |
Market Beta |
1.64 |
|
|
A. 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 weighted-average cost of capital:
B. 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.
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