Table 9.3 Balance Sheet General Talc Mines December 31, 2003 Assets Current Assets Cash Accounts Receivable Inventories Total Current Assets Net Fixed Assets Total Assets $25,000 120,000 300,000 $445,000 $500,000 $945,000 Liabilities and Stockholders' Equity Current Liabilities Accounts Payable $80,000 Notes Payable 350,000 Accruals 50,000 Total Current Liabilities $480,000 Long-Term Debts(150 bonds issued at $1,000 par) 150,000 Total Liabilities $630,000 Stockholders' Equity Common Stock (7,200 shares outstanding) $180,000 Retained Eamings 135,000 Total Stockholders' Equity $315,000 Total Liabilities and Stockholders' Equity $945,000 After-Tax Cost 8% 19 Source of Capital Long-term debt Common stock equity Given this after-tax cost of each source of capital, the weighted average cost of capital using book weights for General Talc Mines is (See Table 9.3) 15.5 percent 17.5 percent 11.6 percent 16.6 percent