еВook 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 $1,161. 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 51 Inventories 360 Long-term debt 1,110 Plant and equipment, net 2,160 Common equity 1,709 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.

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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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 $1,161. 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
51
Inventories
360
Long-term debt
1,110
Plant and equipment, net
2,160
Common equity
1,709
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.
%
Transcribed Image Text:eBook 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 $1,161. 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 51 Inventories 360 Long-term debt 1,110 Plant and equipment, net 2,160 Common equity 1,709 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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