Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please help thanks 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

image text in transcribed

image text in transcribed

image text in transcribed

image text in transcribed

please help thanks

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 9%, 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 $1,125. 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. X Open spreadsheet Calculate Paulson's WACC using market value weights. Round your answer to two decimal places. Do not round your intermediate calculations. Assets Llabilities And Equity Cash $ 120 Accounts payable and accruals $ 10 Accounts receivable 240 Short-term debt 55 Inventories 360 Long-term debt $1,070 Plant and equipment, net 2,160 Common equity 1,745 Total liabilities and $2,880 $2,880 Total assets Calculate Paulson's WACC using market value weights. Round your answer to two decima Assets Llabilities And Equity Accounts payable and Cash $ 120 $10 accruals Accounts receivable 240 Short-term debt Inventories 360 Long-term debt $1,070 Plant and equipment, net 2,160 Common equity 1,745 Total liabilities and Total assets $2,880 $2.880 equity % D E F G 17.00% 9.00% 40.00% 576 $4.00 Yes WACC 2 3 Cost of common equity (1) 4 Before-tax cost of debt (ra) 5 Marginal tax rate U 6 Common shares outstanding 7 Current stock price 8 Long-term debt sells at par value 9 10 Balance Sheet 11 Assets 12 Cash 13 Account receivable 14 Inventories 15 Plant and equipment, net 16 Total assets 17 18 19. Market value of total debt 20 Market value of common equity 21 Total capital A Sheet1 $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 $55.00 $1,070.00 $1,745.00 $2.880.00 Formulas #N/A #N/A #N/A BIO B C D E F H $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 $55.00 $1,070.00 $1,745.00 $2,880.00 10 Balance Sheet 11 Assets 12 Cash 13 Account receivable 14 Inventories 15 Plant and equipment, net 16 Total assets 17 18 19 Market value of total debt 20 Market value of common equity 21 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 Formulas #N/A #N/A #N/A #N/A #N/A #N/A #N/A Sheet1 +

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

Financial Management For Public Health And Not-for-Profit Organizations

Authors: Steven A. Finkler, Daniel L. Smith, Thad D. Calabrese, Robert M. Purtell

7th Edition

1071835335, 978-1071835333

More Books

Students also viewed these Finance questions

Question

Explain the meaning of ergonomics.

Answered: 1 week ago