Solution-Calculate Paulson WACC using market-value weights

Calculate Paulson WACC using market-value weights

Reference no: EM133066568

Question - The Paulson Company's year-end balance sheet is shown below. Its cost of common equity is 16%, its before-tax cost of debt is 10%, 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 $1,116. 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	46
Inventories	360	Long-term debt	1,070
Plant and equipment, net	2,160	Common equity	1,754
Total assets	$2,880	Total liabilities and equity	$2,880

Required - Calculate Paulson's WACC using market-value weights. Do not round intermediate calculations.

Reference no: EM133066568

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Calculate Paulson WACC using market-value weights : The firm's total debt, which is the sum of the company's short-term debt and long-term debt, equals $1,116. Calculate Paulson WACC using market-value weights

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Calculate Paulson WACC using market-value weights

Reference no: EM133066568

Reference no: EM133066568

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