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Answer the following questions. The XXX Company has a marginal tax rate of 40%. The company can issue new bonds at par that would provide
Answer the following questions. The XXX Company has a marginal tax rate of 40%. The company can issue new bonds at par that would provide a 8.5% YTM. The firm's beta is 0.7, the T-bill rate is 5%, and the market return is 12%. The firm's long-term debt currently sells at par value for $3,000. The firm has 700 shares of common stock outstanding that sell for $10 per share. What is XXX's capital structure based on market weights? Select one: a. 50% in debt, 50% in equity. o b. 30% in debt, 70% in equity. 0 0 c. 75% in debt, 25% in equity. d. 60% in debt, 40% in equity. e. 40% in debt, 60% in equity. Continued from previous question. What is the firm's weighted average cost of capital? Select one: a. 6.30% b.7.20% c. 5.59% d. 5.70% e. 8.46%
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