A BC E F G 1 WACC NM Cost of common equity (rs) Before tax cost of debt (ra) Marginal tax rate (T) Common shares outstanding Current stock price Long term debt sells at par value 14 00 9 00 40 00 5 576 $4 00 Yes 8 11 10 Balance Sheet Assets 12 Cash 13 Account receivable 14 Inventories 15 Plant and equipment, net 16 Total assets $120 00 $240 00 $360 00 $2,160 00 $2,880 00 Liabilities and Equity Accounts payable and accruals Short term debt Long term debt Common equity Total liabilities and equity $10 00 $49 00 $1,090 00 $1,731 00 $2,880 00 17 18 Formulas N A N A N A 19 Market value of total debt 20 Market value of common equity 21 Total capital 22 Percentage of debt 24 Percentage of common equity 25 After tax cost of debt 23 Perce N A N A 26 A N A 28 Weighted Average Cost of Capital (WACC) N A A BC E F G 1 WACC NM Cost of common equity (rs) Before tax cost of debt (ra) Marginal tax rate (T) Common shares outstanding Current stock price Long term debt sells at par value 14 00 9 00 40 00 5 576 $4 00 Yes 8 11 10 Balance Sheet Assets 12 Cash 13 Account receivable 14 Inventories 15 Plant and equipment, net 16 Total assets $120 00 $240 00 $360 00 $2,160 00 $2,880 00 Liabilities and Equity Accounts payable and accruals Short term debt Long term debt Common equity Total liabilities and equity $10 00 $49 00 $1,090 00 $1,731 00 $2,880 00 17 18 Formulas N A N A N A 19 Market value of total debt 20 Market value of common equity 21 Total capital 22 Percentage of debt 24 Percentage of common equity 25 After tax cost of debt 23 Perce N A N A 26 A N A 28 Weighted Average Cost of Capital (WACC) N A

Question

A BC E F G 1 WACC NM   Cost of common equity (rs) Before tax cost of debt (ra) Marginal tax rate (T) Common shares outstanding Current stock price Long term debt sells at par value 14 00  9 00  40 00  5 576 $4 00 Yes 8 11 10 Balance Sheet  Assets 12 Cash 13 Account receivable 14 Inventories 15 Plant and equipment, net 16 Total assets $120 00 $240 00 $360 00 $2,160 00 $2,880 00 Liabilities and Equity Accounts payable and accruals Short term debt Long term debt Common equity Total liabilities and equity $10 00 $49 00 $1,090 00 $1,731 00 $2,880 00 17 18 Formulas  N A  N A  N A 19 Market value of total debt 20 Market value of common equity 21 Total capital 22 Percentage of debt 24 Percentage of common equity 25 After tax cost of debt 23 Perce  N A  N A 26 A  N A 28 Weighted Average Cost of Capital (WACC)  N A A BC E F G 1 WACC NM   Cost of common equity (rs) Before tax cost of debt (ra) Marginal tax rate (T) Common shares outstanding Current stock price Long term debt sells at par value 14 00  9 00  40 00  5 576 $4 00 Yes 8 11 10 Balance Sheet  Assets 12 Cash 13 Account receivable 14 Inventories 15 Plant and equipment, net 16 Total assets $120 00 $240 00 $360 00 $2,160 00 $2,880 00 Liabilities and Equity Accounts payable and accruals Short term debt Long term debt Common equity Total liabilities and equity $10 00 $49 00 $1,090 00 $1,731 00 $2,880 00 17 18 Formulas  N A  N A  N A 19 Market value of total debt 20 Market value of common equity 21 Total capital 22 Percentage of debt 24 Percentage of common equity 25 After tax cost of debt 23 Perce  N A  N A 26 A  N A 28 Weighted Average Cost of Capital (WACC)  N A

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A BC E F G 1 WACC NM + Cost of common equity (rs) Before-tax cost of debt (ra) Marginal tax rate (T) Common shares

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