MicroTech Corporation is subject to a 38% income tax rate. Given the following information about the firm's capital structure, calculate the corporation's weighted-average cost of capital (WACC): (Do not round intermediate calculations. Round your answers to 2 decimal places. (i.e. 0.1234 12.34%).) Market Value After-Tax Rate or Expected Return Source of Funds Long-term debt $ 70 million Preferred stock Common stock 20 million 100 million Components for Source of Funds WACC Calculation Long-term debt % Preferred stock % Common stock % % 10% 12 16
MicroTech Corporation is subject to a 38% income tax rate. Given the following information about the firm's capital structure, calculate the corporation's weighted-average cost of capital (WACC): (Do not round intermediate calculations. Round your answers to 2 decimal places. (i.e. 0.1234 12.34%).) Market Value After-Tax Rate or Expected Return Source of Funds Long-term debt $ 70 million Preferred stock Common stock 20 million 100 million Components for Source of Funds WACC Calculation Long-term debt % Preferred stock % Common stock % % 10% 12 16
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:MicroTech Corporation is subject to a 38% income tax rate. Given the following information about the firm's capital structure, calculate
the corporation's weighted-average cost of capital (WACC): (Do not round intermediate calculations. Round your answers to 2
decimal places. (i.e. 0.1234 = 12.34%).)
Source of Funds
Long-term debt
Preferred stock
Common stock
Market Value
$ 70 million
20 million
100 million
Components for
Source of Funds
WACC Calculation
Long-term debt
%
Preferred stock
%
Common stock
%
%
After-Tax Rate or Expected
Return
10%
12
16
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