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Assistance with step by step solution for the second problem. I had to post the first question because it is continued from it. Ty! Use
Assistance with step by step solution for the second problem. I had to post the first question because it is continued from it. Ty!
Use the information to 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 13% YTM. The firm's beta is 1.4, the T-bill rate is 5%, and the market return is 12%. The firm's long-term debt currently sells at par value for $1,500. The firm has 350 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. 70% in debt, 30% in equity. O c. 30% in debt, 70% in equity. O d. 60% in debt, 40% in equity. e. 40% in debt, 60% in equity. Continued from the previous question. What is the firm's weighted average cost of capital? Select one: O a 13.95% b. 9.90% O c. 15.70% O d. 12.70% e. 11.59%Step by Step Solution
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