The Paulson Company's year-end balance sheet is shown below. Its cost of common equity is 16%,...

The Paulson Company's year-end balance sheet is shown below. Its cost of common equity is 16%, its before-tax cost of debt is 11%, 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 $1,183. The firm has 576 shares of common stock outstanding that sell for $4.00 per share.

Calculate Paulson's WACC using market-value weights. Round your answer to two decimal places. Do not round your intermediate calculations.

Assets		Liabilities And Equity
Cash	$ 120	Accounts payable and accruals	$ 10
Accounts receivable	240	Short-term debt	43
Inventories	360	Long-term debt	$1,140
Plant and equipment, net	2,160	Common equity	1,687
Total assets	$2,880	Total liabilities and equity	$2,880

WACC = % ?

Expert Solution

jeff jeffy answered 2 years ago

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