General Accounting The following data pertains to Xena Corp.:Xena Corp. Total Assets $23,610 Interest-Bearing Debt (market value) $11,070 Averageborrowing rate for debt 10.2% CommonEquity: Book Value $ 6,150 Market Value$25,830 Marginal Income Tax Rate 37%Market Beta 1.73 Assuming that the risk-freerate is 4.5% and the market risk premium is6.2%, calculate Xena's cost of equity capitalusing the capital asset pricing model. Selectone:A. 8.9%B. 10.4%C. 13.4%D. 15.2%

As per CAPM, Cost of Equity Capital = Risk-free rate + Beta*Market Risk Premium Cost of Equity…

Answered: The following data pertains to Xena…

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter14: Long-term Liabilities: Bonds And Notes

Section: Chapter Questions

Problem 1PEA

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Calculate WACC from following data. Risk free rate 1.63% total debt $78.93 billion Market Cap $2580 billion Beta 0.86 Corporate Bond rate 3.10% CAPM S&P historical return 5.90% Tax Rate 21% please show steps
You have the following information on a company on which to base your calculations and discussion: Cost of equity capital (rE) = 18.55% Cost of debt (rD) = 7.85% Expected market premium (rM –rF) = 8.35% Risk-free rate (rF) = 5.95% Inflation = 0% Corporate tax rate (TC) = 35% Current long-term and target debt-equity ratio (D:E) = 2:5 a. What are the equity beta (bE) and debt beta (bD) of the firm described above?[Hint: Assume that the above costs of capital have been generated by an appropriate equilibrium model.] b. What is the weighted-average cost of capital (WACC) for this firm at the current debt-equity ratio? c. What would the company’s cost of equity capital become if you unlevered the capital structure (i.e. reduced gearing until there is no debt)
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The Tree House has a pretax cost of debt of 6.2 percent and a return on assets of 10.6 percent. The debt–equity ratio is .40. Ignore taxes. What is the cost of equity? Multiple Choice 12.98% 8.84% 12.76% 13.48% 12.36%
Given the information below. Find the Weighted Average Cost of Capital Market Value of Equity = $22,000,000; Debt = $15,000,000; Cash or Cash Equivalents = $15,000,000 iD = 0.10 or 10% iMKT = 0.17 or 17% tCorp = 0.30 or 30% bK = 1.5 IRF = 0.02 = 2%
Subject:- finance
As an analyst, you were task to compute for the WACC of various companies given the following information. Income tax rate is 30%. Risk free rate Beta Market return Debt to equity ratio Dettmargin Accenture Co. 4% 1.25 12% 2.50 2% Nestle Co. 3% 1.5 11% 3.00 3% Which compeny nes the nighest cost of equity? FedEx Co. 2% 1.3 10% 4.00 2.50% Cadence Co. 3.50% 1.4 8% 3.50 1.50%
pm.3
Q#2:Debt to Assets Ratio Debt to Equity Before-tax cost of debt0.0 0 6%0.1 0.11 7%0.2 0.25 9%0.3 0.43 12.5%0.4 0.66 15.5%Krf= 3%, Market Risk Premuim = 5%, T=30%, BUL = 0.9.Required: Determine, its capital structure. Q#3: A firm has 20 million shares outstanding, with a $30 per share market price. The firm has $10million in extra cash that it plans to use in a stock repurchase;…
A firm has a return on assets of 7.8 percent and a cost of equity of 11.9 percent. What is the pretax cost of debt if the debt–equity ratio is .72? Ignore taxes.
12.
A firm had a debt ratio of 1.20. The pretax cost of debt is 8% and the reqiured return on asset is 13%. What is the cost of equity if you Ignore taxes? A) 18.24% B) 20.14% C)17.67% D) 19.57% E) 19%

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