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6 June, 21:37

otal 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 Determine the weight on debt capital that should be used to calculate Xena's weighted-average cost of capital. Select one: A. 26.2% B. 30.0% C. 61.3% D. 50.0%

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  1. 6 June, 22:54
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    None of the options available are correct

    Weight on equity capital is 70%

    Explanation:

    Consider the following data below

    Market value of equity=25,830

    Market value of debt=11,070

    Weight on equity capital = E / (D + E) = 25,830 / (25830 + 11070) = 0.7=70%
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