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ABC and XYZ are identical firms in all respects except for their capital structures. ABC is...

ABC and XYZ are identical firms in all respects except for their capital structures. ABC is all-equity financed with $530,000 in stock. XYZ has the same total value but uses both stock and perpetual debt; its stock is worth $310,000 and the interest rate on its debt is 7.9 percent. Both firms expect EBIT to be $62,222. Ignore taxes. The cost of equity for ABC is ________ percent and for XYZ it is ________ percent. Select one: A. 12.09; 12.48 B. 11.74; 9.82 C. 11.74; 14.47 D. 12.09; 9.82 E. 11.74; 12.48

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jeff jeffy answered 5 months ago
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