Cost of Capital: #26 #27]

The following data pertains to Xena Corp.

Xena Corp.
Total Assets	$23,610
Interest-Bearing Debt (market value)	$11,070
Average borrowing rate for debt	12%
Common Equity:
Book Value	$6,150
Market Value	$25,830
Marginal Income Tax Rate	25%
Market Beta	2.5

1. Assuming that the risk-free rate is 5% and the market risk premium is 6%, calculate Xena's cost of equity capital from using the CAPM and cost of debt capital:

2. Using the information from the table, calculate Xenas weighted-average cost of capital:

3. BP Corp. has $200 million dollars of interest-bearing debt outstanding at the end of fiscal 2017 year. In addition, the company incurred $20 million dollars of interest expense in 2017. If the company has a marginal tax rate of 35% calculate BPs after-tax cost of debt capital.