Below is information regarding the capital structure of Micro Advantage Incorporated. On the basis of this...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
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: 1. Micro Advantage issued a $5,150,000 par value, 20-year bond a year ago at 98 (i.e., 98% of par value) with a stated rate of 6%. Today, the bond is selling at 110 (.e., 110 % of par value). If the firm's tax bracket is 30%, what is the current after-tax cost of this debt? 2. Micro Advantage has $5,090,000 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? 3. In addition to the bonds and preferred stock described in requirements 1 and 2, Micro Advantage has 65,000 shares of common stock outstanding that has a par value of $10 per share and a current market price of $190 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 1 Required 2 Required 3 Micro Advantage issued a $5,150,000 par value, 20-year bond a year ago at 98 (.e., 98% of par value) with a stated rate of 6%. Today, the bond is selling at 110 (1.e., 110 % of par value). If the firm's tax bracket is 30%, what is the current after-tax cost of this debt? (Round your answer to 2 decimal places. (...1234 - 12.34%)) Current after-tax cost of this debt % Required 2 > 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: 1. Micro Advantage issued a $5,150,000 par value, 20-year bond a year ago at 98 (i.e., 98% of par value) with a stated rate of 6%. Today, the bond is selling at 110 (.e., 110% of par value). If the firm's tax bracket is 30%, what is the current after-tax cost of this debt? 2. Micro Advantage has $5,090,000 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? 3. In addition to the bonds and preferred stock described in requirements 1 and 2, Micro Advantage has 65,000 shares of common stock outstanding that has a par value of $10 per share and a current market price of $190 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! Required 3 Micro Advantage has $5,090,000 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? (Round your answer to 2 decimal places. (.e..1234 - 12.34%)) After-tax cost of the preferred stock Required 1 % < Required 1 Required 3 > 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: 1. Micro Advantage issued a $5,150,000 par value, 20-year bond a year ago at 98 (.e., 98% of par value) with a stated rate of 6%. Today, the bond is selling at 110 (.e., 110 % of par value). If the firm's tax bracket is 30%, what is the current after-tax cost of this debt? 2. Micro Advantage has $5,090,000 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? 3. In addition to the bonds and preferred stock described in requirements 1 and 2, Micro Advantage has 65,000 shares of common stock outstanding that has a par value of $10 per share and a current market price of $190 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 1 Required 2 Required 3 In addition to the bonds and preferred stock described in requirements 1 and 2, Micro Advantage has 65,000 shares of common stock outstanding that has a par value of $10 per share and a current market price of $190 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)? (Round "Interest or Dividend Rate", "After-tax Rate or Expected Return" and "Cost of Capital Components to 2 decimal places (Le..1234 12.34%), "Weights" to 3 decimal places, and other answers to the nearest whole dollar amount.) Bond Preferred Stock Common Stock Total Book Value Interest or Dividend Rate After-tax Rate or Expected Return % % % C% % % Current Market Values Weights Cost of Capital Components % % % % Show less& 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: 1. Micro Advantage issued a $5,150,000 par value, 20-year bond a year ago at 98 (i.e., 98% of par value) with a stated rate of 6%. Today, the bond is selling at 110 (.e., 110 % of par value). If the firm's tax bracket is 30%, what is the current after-tax cost of this debt? 2. Micro Advantage has $5,090,000 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? 3. In addition to the bonds and preferred stock described in requirements 1 and 2, Micro Advantage has 65,000 shares of common stock outstanding that has a par value of $10 per share and a current market price of $190 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 1 Required 2 Required 3 Micro Advantage issued a $5,150,000 par value, 20-year bond a year ago at 98 (.e., 98% of par value) with a stated rate of 6%. Today, the bond is selling at 110 (1.e., 110 % of par value). If the firm's tax bracket is 30%, what is the current after-tax cost of this debt? (Round your answer to 2 decimal places. (...1234 - 12.34%)) Current after-tax cost of this debt % Required 2 > 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: 1. Micro Advantage issued a $5,150,000 par value, 20-year bond a year ago at 98 (i.e., 98% of par value) with a stated rate of 6%. Today, the bond is selling at 110 (.e., 110% of par value). If the firm's tax bracket is 30%, what is the current after-tax cost of this debt? 2. Micro Advantage has $5,090,000 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? 3. In addition to the bonds and preferred stock described in requirements 1 and 2, Micro Advantage has 65,000 shares of common stock outstanding that has a par value of $10 per share and a current market price of $190 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! Required 3 Micro Advantage has $5,090,000 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? (Round your answer to 2 decimal places. (.e..1234 - 12.34%)) After-tax cost of the preferred stock Required 1 % < Required 1 Required 3 > 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: 1. Micro Advantage issued a $5,150,000 par value, 20-year bond a year ago at 98 (.e., 98% of par value) with a stated rate of 6%. Today, the bond is selling at 110 (.e., 110 % of par value). If the firm's tax bracket is 30%, what is the current after-tax cost of this debt? 2. Micro Advantage has $5,090,000 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? 3. In addition to the bonds and preferred stock described in requirements 1 and 2, Micro Advantage has 65,000 shares of common stock outstanding that has a par value of $10 per share and a current market price of $190 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 1 Required 2 Required 3 In addition to the bonds and preferred stock described in requirements 1 and 2, Micro Advantage has 65,000 shares of common stock outstanding that has a par value of $10 per share and a current market price of $190 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)? (Round "Interest or Dividend Rate", "After-tax Rate or Expected Return" and "Cost of Capital Components to 2 decimal places (Le..1234 12.34%), "Weights" to 3 decimal places, and other answers to the nearest whole dollar amount.) Bond Preferred Stock Common Stock Total Book Value Interest or Dividend Rate After-tax Rate or Expected Return % % % C% % % Current Market Values Weights Cost of Capital Components % % % % Show less&
Expert Answer:
Answer rating: 100% (QA)
The images show a finance problem that requires calculating different costs of capital debt preferred stock common stock and the weighted average cost of capital WACC for a fictitious company named Mi... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
Below is information regarding the capital structure of Micro Advantage Inc. On the basis of this information you are asked to respond to the following three questions: Required 1. Micro Advantage...
-
Below is information regarding the capital structure of Micro Advantage Inc. On the basis of this information you are asked to respond to the following three questions: Required: 1. Micro Advantage...
-
a. Micro Advantage, Inc., issued a $5,000,000, 20-year bond a year ago at 98 with a stated rate of 9 percent. Today, the bond is selling at 110. If the firms tax bracket is 30 percent, what is the...
-
A company operates a standard absorption costing system and absorbs fixed production overheads based on machine hours. The budgeted fixed production overheads for the company for the previous year...
-
A study by a chemical company compared the drainage properties of two different polymers. Ten different sledges were used and both polymers were allowed to drain in each sledge. The free drainage was...
-
The ___________ gives information about relationship between modules of the system and degree of cohesion of the model. (a) Test case diagram (b) Structured chart (c) Entity relation diagrams (d)...
-
Intelligencia Inc. was incorporated as a research and development company in the biotechnology industry. The company incurred the following costs relating to various intangible assets: 1. During the...
-
Samsungs goal of $400 billion in sales by 2020 would bring it to the same level as Walmart. Is this feasible? Why or why not?
-
Overcoming the Barriers to Change in Healthcare System by Carolyn Pexton In this article, barriers to strategic planning for healthcare are discussed. Describe what you believe are the top two...
-
The following transactions of Jacks Auto Supply occurred in November (Balances as of November 1 are given for general ledger and accounts receivable ledger accounts: Danielson $1,100 Dr.; Wallace...
-
Sunland Co., organized in 2019, has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2020 and 2021. Prepare the...
-
If Bing Company reports its year-end total liabilities to be \(\$ 40,000\), and its year-end stockholders' equity to be \(\mathbf{\$ 6 0 , 0 0 0}\), how much are Bing Company's year-end total assets?...
-
What are generally accepted accounting principles and what organization has primary responsibility for their formulation in the United States?
-
Is the sale of an entire business exempt from sales tax? Under what circumstances might such a sale be exempt?
-
What is a resale exemption certificate? Who provides this certificateand to whom?
-
What is the difference between generally accepted accounting principles (GAAP) and international financial reporting standards (IFRS)
-
Balance 1/1 Debits Balance 12/31 Raw Materials Debit 138,000 34,000 24,000 Credits Manufacturing Overhead Credit ? Debit Credit Debits 214,648 Credits Work in Process Debit Credit Balance 1/1 29,000...
-
Classify each of the following as direct costs or indirect costs of operating the Pediatrics ward for children at the Cleveland Clinic: a. Wi-Fi covering the entire hospital campus b. Net cost of...
-
Find the vector with the given magnitude and the same direction as u. Magnitude ||v|| = 6 Direction u = (0, 3)
-
Find an equation of the tangent plane and find a set of symmetric equations for the normal line to the surface at the given point. x + y + z = 9, (3, 3, 3)
-
In Exercises find an equation of the tangent line to the graph at the given point. Parabola 10 8 6 4 2 + -2 24 -4 -6 + (y - 3) = 4(x-5) (6, 1) 2468 +x 14
-
The 2015 annual report of the Procter & Gamble Company (P&G) is available at www.pginvestor.com. After reviewing P&Gs annual report, respond to the following questions: a. When does P&G recognize...
-
Consider a publicly held company whose products you are familiar with. Some examples might include: Access the companys public website and search for its most recent annual report. (Some companies...
-
The 2014 financial statements of LVMH Moet Hennessey-Louis Vuitton S.A.LVMH is a Paris-based holding company and one of the worlds largest and best-known luxury goods companies. As a member-nation of...
Study smarter with the SolutionInn App