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 25%. 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$4.00 per share.CashAssetsAccounts receivableInventoriesLiabilities And Equity$ 120Accounts payable and accruals$ 1053240360Short-term debtLong-term debt1,13030Plant and equipment, netTotal assets2,160$2,880Common equityTotal liabilities and equity1,687$2,880Calculate Paulson's WACC using market-value weights. Do not round intermediate calculations. Round your answer to two decimal places.%

Data given:Cost of equity(Ke) = 14%Before-tax cost of debt (Kd) = 10%Tax rate (T) = 25%Total debt =…

Answered: he Paulson Company's year-end balance…

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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