Xena Corp.Total Assets$21,249Interest-Bearing Debt (market value)$11,070Average borrowing rate for debt10.20%Common Equity: Book Value$5,535Market Value$23,247Marginal Income Tax Rate19%Market Beta1.64 Using the information from the table, and assuming that the risk-free rate is 4.5% and the market risk premium is 6.2%, calculate Xena's weighted-average cost of capital:

Weighted Average Cost of Capital refers to the financial ratio that calculates the overall cost of…

Answered: Xena Corp. Total Assets $21,249…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Xena Corp.
Total Assets	$21,249
Interest-Bearing Debt (market value)	$11,070
Average borrowing rate for debt	10.20%
Common Equity:
Book Value	$5,535
Market Value	$23,247
Marginal Income Tax Rate	19%
Market Beta	1.64



Using the information from the table, and assuming that the risk-free rate is 4.5% and the market risk premium is 6.2%, calculate Xena's weighted-average cost of capital: