The Paulson Company's year-end balance sheet is shown below. Its cost of common equity is 14%, its before-tax cost of debt is 11%, 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 $1,184. The firm has 576 shares of common stock outstanding that sell for $4.00 per share. Assets Cash Accounts receivable Inventories Plant and equipment, net Tips Total assets Tips Liabilities And Equity $ 120 Accounts payable and accruals $ 10 240 Short-term debt 64 360 Long-term debt 1,120 2,160 Common equity 1,686 $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. %
The Paulson Company's year-end balance sheet is shown below. Its cost of common equity is 14%, its before-tax cost of debt is 11%, 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 $1,184. The firm has 576 shares of common stock outstanding that sell for $4.00 per share. Assets Cash Accounts receivable Inventories Plant and equipment, net Tips Total assets Tips Liabilities And Equity $ 120 Accounts payable and accruals $ 10 240 Short-term debt 64 360 Long-term debt 1,120 2,160 Common equity 1,686 $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
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
Section: Chapter Questions
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Transcribed Image Text:The Paulson Company's year-end balance sheet is shown below. Its cost of common equity is 14%, its before-tax cost of debt is 11%, 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 $1,184. The firm has 576 shares of common
stock outstanding that sell for $4.00 per share.
Assets
Cash
Accounts receivable
Inventories
Plant and equipment, net
Tips
Total assets
Tips
Liabilities And Equity
$ 120
Accounts payable and accruals
$ 10
240
Short-term debt
64
360
Long-term debt
1,120
2,160
Common equity
1,686
$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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