Calculate paulson wacc using market-value weights

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The Paulson Company's year-end balance sheet is shown below. Its cost of common equity is 18%, its before-tax cost of debt is 11%, and its marginal tax rate is 25%. Assume that the firm's long-term debt sells at par value. The firm's total debt, which is the sum of the company's short-term debt and long-term debt, equals $1,109. The firm has 576 shares of common stock outstanding that sell for $4.00 per share.

Assets Liabilities And Equity
Cash $ 120 Accounts payable and accruals $ 10
Accounts receivable. $240 Short-term debt 49
Inventories 360 Long-term debt. 1,060
Plant and equipment, net 2,160 Common equity 1,761
Total assets $2,880 Total liabilities and equity $2,880

Calculate Paulson's WACC using market-value weights. Do not round intermediate calculations. Round your answer to two decimal places.

 

 

Reference no: EM132537852

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