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Paulson wacc using market-value weights

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Reference no: EM132652692

The Paulson Company's year-end balance sheet is shown below. Its cost of common equity is 17%, its before-tax cost of debt is 12%, 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 $1,144. 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 54

Inventories 360 Long-term debt 1,090

Plant and equipment, net 2,160 Common equity 1,726

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: EM132652692

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