84 Chapter 3 Financing Activities COMPREHENSIVE PROBLEMS Problem 3-1 MI Air, Inc. engages in the following common stock transactions in 2017 for its 51 par value common stock. The firm earned $200 of net income during 2017, its first year of business. January 1-Issued 200 shares to an investor for $8 per share. December 1-Purchased 40 of the shares sold to the investor for $10 per share, and placed them in the corporate treasury December 10-Issued 75 shares to another investor at $9 per share in order to secure additional financing for the fim December 12-Issued 30 of the treasury shares when the market price was $11 per share December 16-Declared a $ 20 per share dividend. December 31-Paid the dividend declared on December 15 Requirements (Use T-accounts as necessary to track account balances) Journalive the above transactions. - Present the effects of the stock transactions on MI Air's 2017 income statement, Report stockholders' equity on the company's December 31, 2017 balance sheet Problem 3-2 Subtle Edge, Inc. presents the following excerpts from its December 31, 2017 balance sheet Current Liabuilities: Notes payable, 8% Long-term Liabilities Bonds payable, 10% s 200,000 1,000,000 Shareholders Equity Common stock, par Additional paid-in-capital,common stock Total contributed capital Retained earnings 50,000 350,000 400,000 250,000 650,000 Total sharehokders equity The accounting department also coniveys the following information Risk-free rate of return 3% Risk premium-4.05% Tax rate-30% Required: Compute Subtle Edge's weighted average cost of capital