Question
The following information relates to the Falcon Division of Xenon Enterprises: Interest rate on debt capital 9 % Cost of equity capital 13 % Market
The following information relates to the Falcon Division of Xenon Enterprises:
| Interest rate on debt capital | 9 | % | |
| Cost of equity capital | 13 | % | |
| Market value of debt capital | $ | 51 | million |
| Market value of equity capital | $ | 81 | million |
| Income tax rate | 35 | % | |
On the basis of this information, Falcons weighted-average cost of capital is closest to:
Multiple Choice
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4.64%.
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9.58%.
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10.24%.
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11.45%.
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None of the answers is correct.
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Financial and Managerial Accounting Information for Decisions
Authors: John Wild, Ken Shaw, Barbara Chiappetta
5th edition
978-1259317552, 1259317552, 978-0078025600, 78025605, 978-1259335013, 1259335011, 978-1259347641
