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  3. 1. crawford enterprises is a publicly held company

1. Crawford Enterprises is a publicly held company located in Arnold, Kansas. The firm began...

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Finance

  1. 1. Crawford Enterprises is a publicly held company located in Arnold, Kansas. The firm began as a small tool and die shop but grew over its 35-year life to become a leading supplier of metal fabrication equipment used in the farm tractor industry. At the close of 2020 the firms balance sheet appeared as follows: (3 Marks)

Cash

15,000

Accounts Receivable

75,000

Inventories

200,000

Long-term Liabilities

1,790,000

Net Property, Plant, Equipment

3,000,000

Common Equity

1,500,000

Total Assets

3,290,000

Total Debt and Equity

3,290,000

At present, the firms common stock is selling for a price equal to its book value, and the firms bonds are selling at par. Crawfords managers estimate that the market requires a 12 percent return on its common stock, the firms bonds command a yield to maturity of 7 percent, and the firm faces a tax rate of 30 percent. What is Crawfords weighted average cost of capital?

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