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11. [10 marks] Assume that we are in a frictionless capital market. ABC Co. and XYZ Co. have identical business lines. They also have the

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11. [10 marks] Assume that we are in a frictionless capital market. ABC Co. and XYZ Co. have identical business lines. They also have the same cost of debt. ABC has total assets worth $13 million and outstanding debt of $3 million. The debt-to-equity ratio of ABC is half that of XYZ. We also know that the cost of equity of ABC and XYZ are 15% and 20%, respectively. Find R, and Rd

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