Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. 7. the paulson company's year-end balance she

7. The Paulson Company's year-end balance sheet is shown below....

70.2K

Verified Solution

Question

Accounting

7.

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 12%, and its marginal tax rate is 25%. Assume that the firm's long-term debt sells at par value. The firms total debt, which is the sum of the companys short-term debt and long-term debt, equals $1,149. 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 59
Inventories 360 Long-term debt 1,090
Plant and equipment, net 2,160 Common equity 1,721
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.

----%

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students