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Computation Question 2: (16 pts) XM Radio 's equity has a book value of $25 million and a market value of $75 million. Its market

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Computation Question 2: (16 pts) XM Radio 's equity has a book value of $25 million and a market value of $75 million. Its market value of debt is equal to its book value of debt, $50 million. The company's cost of debt is 10%. The risk-free rate is 5%. The expected market risk premium is 10%. The company's equity has a beta of 1.5. (a) What's the expected return on the company's equity? (b) What's the company's weighted average cost of capital

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