Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Excel Online Structured Activity: WACC The Paulson Company's year-end balance sheet is shown below. Its cost of common equity is 17%, its before-tax cost of

image text in transcribed
image text in transcribed
Excel Online Structured Activity: WACC The Paulson Company's year-end balance sheet is shown below. Its cost of common equity is 17%, its before-tax cost of debt is 12%, 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 $1,131. The firm has 576 shares of common stock outstanding 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 Accounts payable and $ 10 accruals Cash $ 120 Accounts receivable 240 Short-term debt 61 Inventories 360 Long-term debt $1,070 Plant and equipment, net 2,160 Common equity 1,739 Total assets $2,880 Total liabilities and equity $2,880 % Check My Work Reset Problem Autosaved at 6 52 PM Naxd Back 1 WACC 2 3 Cost of common equity (2) 4 Before-tax cost of debt (ra) 5 Marginal tax rate (U) 5 Common shares outstanding 7 Current stock price B Long-term debt sells at par value 17.00% 12.00% 40.00% 576 $4.00 Yes $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 $61.00 $1.070.00 $1,739.00 $2.880.00 0 Balance Sheet: 1 Assets 2 Cash 3 Account receivable 4 Inventories 5 Plant and equipment, net 6 Total assets 7 8 9 Market value of total debt 20 Market value of common equity Total capital 22 23 Percentage of debt 24 Percentage of common equity 25 26 After-tax cost of debt 27 28 Weighted Average Cost of Capital (WACC) 29 30 31 32 Sheet1 + Formulas #N/A #N/A #N/A #N/A #N/A #N/A #N/A Calculation Mode: Automatic Workbook Statistics

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Managerial Finance

Authors: Lawrence J Gitman, Chad J Zutter

7th Edition

0133546403, 9780133546408

More Books

Students also viewed these Finance questions

Question

Excel caculation on cascade mental health clinic

Answered: 1 week ago

Question

years ago. d Only using studies which feature empirical data.

Answered: 1 week ago