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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

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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 $1,209. 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. HHI 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 Cash $ 120 Accounts payable and accruals $ 10 Accounts receivable 240 Short-term debt 59 Inventories 360 Long-term debt $1,150 Plant and equipment, net 2,160 Common equity 1,661 Total assets $2,880 Total liabilities and equity $2,880 % B 14.00% 10.00% 40.00% 576 $4.00 Yes 3 Cost of common equity (r.) 4 Before-tax cost of debt (ra) 5 Marginal tax rate) 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 22 23 Percentage of debt 24 Percentage of common equity 25 26 After-tax cost of debt 27 $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 $59.00 $1,150.00 $1,661.00 $2.880.00 Formulas #N/A #N/A #N/A #N/A #N/A #N/A Formulas #N/A #N/A #N/A 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 #N/A #N/A #N/A #N/A 23

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