MicroTech Corporation is subject to a 35% income tax rate. Given the following information aboutthe firm’s capital structure, calculate the corporation’s weighted-average cost of capital (WACC),rounded to 1 decimal place:Source of Funds Market Value After-Tax Rate or Expected ReturnLong-term debt $40 million 7.0%Preferred stock 20 million 9.0 Common stock 60 million 12.0
MicroTech Corporation is subject to a 35% income tax rate. Given the following information aboutthe firm’s capital structure, calculate the corporation’s weighted-average cost of capital (WACC),rounded to 1 decimal place:Source of Funds Market Value After-Tax Rate or Expected ReturnLong-term debt $40 million 7.0%Preferred stock 20 million 9.0 Common stock 60 million 12.0
Foundations of Business (MindTap Course List)
6th Edition
ISBN:9781337386920
Author:William M. Pride, Robert J. Hughes, Jack R. Kapoor
Publisher:William M. Pride, Robert J. Hughes, Jack R. Kapoor
Chapter15: Using Management And Accounting Information
Section15.8B: Financial Ratios
Problem 1CC
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MicroTech Corporation is subject to a 35% income tax rate. Given the following information about
the firm’s capital structure, calculate the corporation’s weighted-average cost of capital (WACC),
rounded to 1 decimal place:
Source of Funds Market Value After-Tax Rate or Expected Return
Long-term debt $40 million 7.0%
Common stock 60 million 12.0
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