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  3. assume that xyz corporation is a leveraged company

ASSUME THAT XYZ CORPORATION IS A LEVERAGED COMPANY WITH THE FOLLOWING INFORMATION: K1 = COST...

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Finance

ASSUME THAT XYZ CORPORATION IS A LEVERAGED COMPANY WITH THE FOLLOWING INFORMATION:

K1 = COST OF CAPITAL FOR XYZ = 13%

i = BEFORE TAX BORROWING COST = 8%

t = MARGINAL CORPORATE INCOME TAX RATE = 30%

IF XYZ DEBT-TO-MARKET-VALUE RATIO IS 40%, THEN THE WEIGHTED AVERAGE COST OF CAPITAL, K, IS:

Select one: a. 12% b. 9% c. 10% d. 8%

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