Multiple Choice
The market value of XYZ Corporation's common stock is 40 million and the market value of the risk-free debt is 60 million. The beta of the company's common stock is 0.8, and the expected market risk premium is 10%. If the Treasury bill rate is 6%, what is the firm's cost of capital? (Assume no taxes.)
A) 9.2%
B) 14%
C) 8.1%
D) None of the above
Correct Answer:
Verified
Correct Answer:
Verified
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