Calculate pawlson wacc using market-value weights

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Problem: WACC

The Pawlson Company's year-end balance sheet is shown below. Its cost of common equity is 14%, its before-tax cost of debt is 9%, and its marginal tax rate is 40%. 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 $1,092. The firm has 576 shares of common stock outstanding that sell for $4.00 per share. Calculate Pawlson's WACC using market-value weights. Round your answer to two decimal places. Do not round your intermediate calculations.

Assets
Liabilities And Equity
Cash $ 120
Accounts payable and accruals $ 10
Accounts receivable 240
Short-term debt 42
Inventories 360
Long-term debt $1,050
Plant and equipment, net 2,160
Common equity 1,778
Total assets $2,880
Total liabilities and equity $2,880

Reference no: EM132055587

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