Miami Publishing Company financial statements

Balance Sheets (in thousands of dollars)

2022 2021 2020

Cash 30 20 30

Accounts receivable 200 395 430

Inventory 400 510 640

Current assets 630 925 1100

Gross fixed assets 1000 1000 1650

Accumulated depreciation 180 220 280

Net fixed assets 820 780 1370

Total assets 1450 1705 2470

Accounts payable 250 300 375

Accruals 200 260 315

Notes payable 100 150 280

Current liabilities 550 710 970

Long-term debt (bonds) 500 500 700

Preferred stock 0 0 0

Common stock 25 25 200

Paid-in capital 75 75 100

Retained earnings 300 395 500

Total liab & equity 1450 1705 2470

Income Statements (in thousands of dollars)

2022 2021 2020

Sales 4000 4800 5800

Operating expenses 3640 4520 5560

Depreciation expense 40 40 60

EBIT 320 240 180

Interest expense 40 50 70

EBT 280 190 110

Taxes (40%) 112 76 44

NI 168 114 66

Total cash dividends 11 19 11

Use the information for the year 2022 to calculate the weighted average cost of capital (WACC) for Miami Publishing. Assume the individual costs of capital as follows:

cost of debt Rd = 12%

cost of preferred stock Rps = 0%

cost of common equity Rce = 23%