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The Paulson Company's year-end balance sheet is shown below. Its cost of common equity is 16%, its before-tax cost of debt is 11%, and its

The Paulson Company's year-end balance sheet is shown below. Its cost of common equity is 16%, its before-tax cost of debt is 11%, and its marginal tax rate is 40%. Assume that the firm's long-term debt sells at par value. The firms total debt, which is the sum of the companys short-term debt and long-term debt, equals $1,121. 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.

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image text in transcribedCalculate 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 61
Inventories 360 Long-term debt $1,060
Plant and equipment, net 2,160 Common equity 1,749
Total assets $2,880 Total liabilities and equity $2,880
B D E F G 16.00% 11.00% 40.00% 576 $4.00 Yes A 1 WACC 2 3 Cost of common equity (rs) 4 Before-tax cost of debt (rd) 5 Marginal tax rate (T) 6 Common shares outstanding 7 Current stock price 8 Long-term debt sells at par value 9 LO Balance Sheet: 11 Assets 12 Cash 13 Account receivable 14 Inventories 15 Plant and equipment, net 16 Total assets 17 18 $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 $61.00 $1,060.00 $1,749.00 $2,880.00 Formulas Market value of total debt Market value of common equity Total capital Formulas #N/A #N/A #N/A Percentage of debt Percentage of common equity #N/A #N/A After-tax cost of debt #N/A Weighted Average Cost of Capital (WACC) #N/A

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