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Liabilities and Equity Accounts payable and accruals Short-term debt Long-term debt Common equity Total liabilities and equity Assets Cash $ 120 $ 10 Accounts receivable Inventories Plant and equipment, net Total assets 240 47 360 1,120 2,160 1,703 $2,880 $2,880

Liabilities and Equity Accounts payable and accruals Short-term debt Long-term debt Common equity Total liabilities and equity Assets Cash $ 120 $ 10 Accounts receivable Inventories Plant and equipment, net Total assets 240 47 360 1,120 2,160 1,703 $2,880 $2,880

Essentials Of Investments
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
Problem 1PS
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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 10%, 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 $1,167. The firm has
576 shares of common stock outstanding that sell for $4.00 per share. Calculate Paulson’s
WACC using market-value weights.

Liabilities and Equity Accounts payable and accruals Short-term debt Long-term debt Common equity Total liabilities and equity Assets Cash $ 120 $ 10 Accounts receivable Inventories Plant and equipment, net Total assets 240 47 360 1,120 2,160 1,703 $2,880 $2,880
Transcribed Image Text:Liabilities and Equity Accounts payable and accruals Short-term debt Long-term debt Common equity Total liabilities and equity Assets Cash $ 120 $ 10 Accounts receivable Inventories Plant and equipment, net Total assets 240 47 360 1,120 2,160 1,703 $2,880 $2,880
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