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The following are balance sheets for the Genatron Manufacturing Corporation for the years 2010 and...

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Accounting

The following are balance sheets for the Genatron Manufacturing Corporation for the years 2010 and 2011:

BALANCE SHEET 2010 2011 Cash $50,000 $40,000 Accounts receivable 200,000 260,000 Inventory 450,000 500,000 Total current assets 700,000 800,000 Fixed assets (net) 300,000 400,000 Total assets $1,000,000 $1,200,000 Bank loan, 10% $ 90,000 $ 90,000 Accounts payable 130,000 170,000 Accruals 50,000 70,000 Total current liabilities $270,000 $330,000 Long-term debt, 12% 300,000 400,000 Common stock, $10 par 300,000 300,000 Capital surplus 50,000 50,000 Retained earnings 80,000 120,000 Total liabilities and equity $1,000,000 $1,200,000

a. Calculate the weighted average cost of capital based on book value weights. Assume an after-tax cost of new debt of 8.63 percent and a cost of common equity of 16.5 percent. b. The current market value of Genatron

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