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

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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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 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 $1,114. 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 64
Inventories 360   Long-term debt 1,050
Plant and equipment, net 2,160   Common equity 1,756
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.

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