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XYZ Corp has 80 million shares outstanding trading for $65 per share. In addition, XYZ Corp has $1,250 million in outstanding debt. The risk free
XYZ Corp has 80 million shares outstanding trading for $65 per share. In addition, XYZ Corp has $1,250 million in outstanding debt. The risk free rate of return is 4%, expected market return in 9% and XYZ's beta is 1.75. AQNPs debt cost of capital is 6.5%, and the corporate tax rate is 40%. a. What is XYZs unlevered cost of capital? b. What is XYZs after-tax debt cost of capital? c. What is XYZs weighted average cost of capital? d. What is the difference between unlevered and weighted average cost of capital (WACC)?
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