6 Exercise 12-31 Weighted-Average Cost of Capital (WACC) [LO 12-4] 0.55 points 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 issued a $5,550,000 par value, 15-year bond a year ago at 94 (Le, 94% of par value) with a stated rate of 7%. Today, the bond is selling at 110 (ie, 110% of par value). If the firm's tax bracket is 25%, what is the current after-tax cost of this debt? 2. Micro Advantage has $5,550,000 preferred stock outstanding that it sold for $25 per share. The preferred stock has a per share par value of $24 and pays a $2 dividend per year. The current market price is $31 per share. The firm's tax bracket is 32%. 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 68,000 shares of common stock outstanding that has a par value of $10 per share and a current market price of $140 per share. The expected after-tax market return on the firm's common equity is 16%, what is Micro Advantage's weighted-average cost of capital (WACC)? Answer is not complete Complete this question by entering your answers in the tabs below Required1 Required 2 Required 3 In addition to the bonds and preferred stock described in requirements 1 and 2, Micro Advantage has 68,000 shares of common stock outstanding that has a par value of $10 per share and a current market price of $140 per share. The expected after-tax market return on the firm's common equity is 16%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 (i.e. .1234-12.34%), "weights" to 3 decimal places, and other answers to the nearest whole dollar amount.) Show less After-tax Rate urrent Ma of C Book Value Dividend Rate Weights Com 7.00 % 5,550,000. 12.00 3% 0.00 % 5,550,000 Bond Stock Stock 4.78 % 0.471 6.45 % 680,000 6.00 Total 11,780,000 0.471 0.00 |%