Assume That XYZ Corporation Is a Leveraged Company with the Following

question 86

Multiple Choice

Assume that XYZ Corporation is a leveraged company with the following information: $$\begin{array} { l } K _ { l } = \text { cost of equity capital for } \mathrm { XYZ } = 13 \% \\i = \text { before-tax borrowing cost } = 8 \% \\t = \text { marginal corporate income tax rate } = 30 \%\end{array}$$ If XYZ's debt-to-total-market-value ratio is 40%,then its weighted average cost of capital,K,is:

• A)8%
• B)9%
• C)10%
• D)12%

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