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 10%, 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 $1,167. The firm has 576 shares of common stock outstanding that sell for $4.00 per share. Calculate Paulson's WACC using market-value weights.

Assets

Cash: 120

Accounts Receibable: 240

Inventories: 360

Plant and equipment, net: 2,160

Total Assets: 2,880

Liabilities and Equity

Accounts payable and accruals: 10

Short-term debt: 47

Long-term debt: 1,120

Common Equity: 1,703

Total Liabilities and Equity: 2,880

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