Assume That XYZ Corporation Is a Leveraged Company with the Following

question 8

Multiple Choice

Assume that XYZ Corporation is a leveraged company with the following information: K_l = cost of equity capital for XYZ = 13 percent
I = before-tax borrowing cost = 8 percent
T = marginal corporate income tax rate = 30 percent
If XYZ's debt-to-total-market-value ratio is 40 percent,then its weighted average cost of capital,K,is:

• A)8 percent
• B)9 percent
• C)10 percent
• D)12 percent

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