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Excel Online Structured Activity: WACC The Paulson Company's year-end balance sheet is shown below. Its cost of common equity is 14%, its before-tax cost of

Excel Online Structured Activity: WACC

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 11%, and its marginal tax rate is 40%. 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 $1,135. The firm has 576 shares of common stock outstanding that sell for $4.00 per share. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below.

Open spreadsheet

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 55
Inventories 360 Long-term debt $1,080
Plant and equipment, net 2,160 Common equity 1,735
Total assets $2,880 Total liabilities and equity $2,880

fill in the blank 2

WACC
Cost of common equity (rs) 14.00%
Before-tax cost of debt (rd) 11.00%
Marginal tax rate (T) 40.00%
Common shares outstanding 576
Current stock price $4.00
Long-term debt sells at par value Yes
Balance Sheet:
Assets Liabilities and Equity
Cash $120.00 Accounts payable and accruals $10.00
Account receivable $240.00 Short-term debt $55.00
Inventories $360.00 Long-term debt $1,080.00
Plant and equipment, net $2,160.00 Common equity $1,735.00
Total assets $2,880.00 Total liabilities and equity $2,880.00
Formulas
Market value of total debt #N/A
Market value of common equity #N/A
Total capital #N/A
Percentage of debt #N/A
Percentage of common equity #N/A
After-tax cost of debt #N/A
Weighted Average Cost of Capital (WACC) #N/A

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