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The following data pertains to Michalko Corp. Use this information to complete Questions 13 17. Michalko Corp. Total Assets $14,680 Interest-Bearing Debt $8,124 Average borrowing

The following data pertains to Michalko Corp.

Use this information to complete Questions 13 17.

Michalko Corp.

Total Assets

$14,680

Interest-Bearing Debt

$8,124

Average borrowing rate for debt

11.5%

Common Equity:

Book Value

$5,120

Market Value

$25,700

Marginal Income Tax Rate

37%

Market Equity Beta

1.44

  1. Determine the weight on debt capital that should be used to calculate Michalko's weighted-average cost of capital:
    76.0%
    24.0%
    50%
    61.3%

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