Reference no: EM132724638

Use the information to answer the following questions.

• The XXX Company has a marginal tax rate of 40%.

• The company can issue new bonds at par that would provide a 8.5% YTM.

• The firm's beta is 0.7, the T-bill rate is 5%, and the market return is 12%.

• The firm's long-term debt currently sells at par value for $3,000.

• The firm has 700 shares of common stock outstanding that sell for $10 per share.

What is XXX's cost of common stock?

Select one:

a. 10.36%

b. 9.90%

c. 21.08%

d. 14.80%

e. 8.80%

Continued from previous question. What is the firm's weighted average cost of capital?

Select one:

a. 8.46%

b. 7.20%

c. 6.30%

d. 5.70%

e. 5.59%