Company XYZ has 50,000 shares of common stock outstanding at a market price of $10 a share

Finance May 08, 2021

Company XYZ has 50,000 shares of common stock outstanding at a market price of $10 a share. The firm also has bond issue outstanding with a total face value of $100,000, which Is now selling for $95,000. The cost of equity Is 13 percent per year, while the cost of debt Is 6 percent per year. The firm has a beta of 15 and a tax rate of 23 percent. What Is the weighted average cost of capital?
Multiple Choice 0 15.7% 0 117% 0 123%
0 57%

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PFA

So, the correct option is 2nd "11.7%".

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