None of those specified. Question 3 (6 points) Microsoft is contemplating a purchase of TikTok, European clockmaker. TikTok has the following balance sheet and market information available: (5 thousands) Current Assets 35,000 Acets Payable Long term Debt Fixed Assets 55,000 Common Equity Common stock Paid in Capital Retained earnings Total Assets 90,000 Total Liab. & Equity 10,000 35,000 1,500 4,500 39,000 90.000 Current Market Rates: Current Market Prices & Other Info: 8% 1 yr Tbill rate 10 yr Tbond Rate Market Risk Premium Tax rate 2.00% 3.35% 5.00% 25% TikTok Debt YTM Microsoft Debt YTM Microsoft Yahoo Beta Tiktok Yahoo Beta 6% 1.10 1.85 The current liabilities consist entirely of accounts payable and accruals. TikTok bonds are selling at 100% of par and it has 1.5 million shares of equity stock outstanding. Microsoft believes a D/E ratio of 1.51 is more appropriate for TikToks debt level after the acquisition Choose the best answer. Show all work on your excel. Estimate the cost of equity Microsoft should use when acquiring TikTok. 9.5% MacBook Air 000 F4 11 F5 F6 F7 FB None of those specified. Question 3 (6 points) Microsoft is contemplating a purchase of TikTok, European clockmaker. TikTok has the following balance sheet and market information available: (5 thousands) Current Assets 35,000 Acets Payable Long term Debt Fixed Assets 55,000 Common Equity Common stock Paid in Capital Retained earnings Total Assets 90,000 Total Liab. & Equity 10,000 35,000 1,500 4,500 39,000 90.000 Current Market Rates: Current Market Prices & Other Info: 8% 1 yr Tbill rate 10 yr Tbond Rate Market Risk Premium Tax rate 2.00% 3.35% 5.00% 25% TikTok Debt YTM Microsoft Debt YTM Microsoft Yahoo Beta Tiktok Yahoo Beta 6% 1.10 1.85 The current liabilities consist entirely of accounts payable and accruals. TikTok bonds are selling at 100% of par and it has 1.5 million shares of equity stock outstanding. Microsoft believes a D/E ratio of 1.51 is more appropriate for TikToks debt level after the acquisition Choose the best answer. Show all work on your excel. Estimate the cost of equity Microsoft should use when acquiring TikTok. 9.5% MacBook Air 000 F4 11 F5 F6 F7 FB