Winterbourne Manufacturing Corporation shows its book balance sheet (figures in $ millions)

Cash and marketable securities 100

Accounts receivable 200

Inventory 50

Current assets 350

Real estate 2,100

Other assets 150

Total 2,600

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Bank loan 280

Account Receivable 120

Current Liabilities 400

Long-Term Debt 1800

Equity 400

Total 2,600

The company's long-term debt is secured by its real estate assets, but it also uses short-term bank loans as a permanent source of financing.

Trading at $90 per share, the company has 10 million shares of stock outstanding, and pays 9% interest on the secured debt, 10% interest on the bank debt.

The expected return on Winterbourne's common stock is 18%, marginal tax rate is 21%.

Assuming that the book and market values of Winterbournes debt are the same, calculate Winterbourne's WACC.

Q5.3 Winterbourne Manufacturing Corporation shows its book balance sheet (figures in $ millions) (10 marks) Bank loan 280 Cash and marketable securities 100 Accounts receivable 200 Accounts payable 120 Inventory 50 Current liabilities 400 350 Current assets Real estate 2,100 Long-term debt 1,800 Other assets 150 Equity 400 Total 2,600 Total 2,600 The company's long-term debt is secured by its real estate assets, but it also uses short-term bank loans as a permanent source of financing. Trading at $90 per share, the company has 10 million shares of stock outstanding, and pays 9% interest on the secured debt, 10% interest on the bank debt. The expected return on Winterbourne's common stock is 18%, marginal tax rate is 21%. Assuming that the book and market values of Winterbourne's debt are the same, calculate Winterbourne's WACC