80.2K

Verified Solution

Link Copied!

Please fill the attached table correctly as some of my answers were marked wrong.Below is information regarding the capital structure of Micro Advantage Incorporated. On the basis of this information you are asked to

respond to the following three questions:

Required:

Micro Advantage issued a $$5,950,000$ par value, $20-$year bond a year ago at $98($i$.$e$.,98\%$ of par value$)$ with a stated rate of $5\%.$

Today, the bond is selling at $110($i$.$e$.,110\%$ of par value$).$ If the firm's tax bracket is $30\%,$ what is the current after$-$tax cost of this debt?

Micro Advantage has $$5,570,000$ preferred stock outstanding that it sold for $$25$ per share. The preferred stock has a per share par

value of $$24$ and pays a $$3$ dividend per year. The current market price is $$30$ per share. The firm's tax bracket is $30\%.$ What is the

after$-$tax cost of the preferred stock?

In addition to the bonds and preferred stock described in requirements $1$ and $2,$ Micro Advantage has $71,000$ shares of common

stock outstanding that has a par value of $$10$ per share and a current market price of $$160$ per share. The expected after$-$tax market

return on the firm's common equity is $20\%.$ What is Micro Advantage's weighted$-$average cost of capital $($WACC$)?$

Complete this question by entering your answers in the tabs below.

Required $3$

In addition to the bonds and preferred stock described in requirements $1$ and $2,$ Micro Advantage has $71,000$ shares of common stock outstanding that has a pa

value of $$10$ per share and a current market price of $$160$ per share. Please fill the attached table correctly as some on my answer were wrong.

The expected after$-$tax market return on the firm's common equity is $20\%.$ What is Micro

Advantage's weighted$-$average cost of capital $($WACC$)?($Round "Interest or Dividend Rate", "After$-$tax Rate or Expected Return" and "Cost of Capital Component

to $2$ decimal places $($i$.$e$.1234=12\mathrm{.}34\%),$ "Weights" to $3$ decimal places, and other answers to the nearest whole dollar amount.$)$

Answer & Explanation Solved by verified expert

See Answer