Arizona State University FIN FIN 254 The Paulson Company’s year-end balance sheet is shown below. Its…

Arizona State University FIN FIN 254 The Paulson Company’s year-end balance sheet is shown below. Its…

The Paulson Company’s year-end balance sheet is shown below. Its cost of common equity is 17%, its before-tax cost of debt is 12%, 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 $1,191. 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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Open spreadsheet

 

Calculate Paulson’s WACC using market-value weights. Round your answer to two decimal places. Do not round your intermediate calculations.

 

AssetsLiabilities And Equity
Cash$ 120Accounts payable and accruals$ 10
Accounts receivable240Short-term debt41
Inventories360Long-term debt$1,150
Plant and equipment, net2,160Common equity1,679
Total assets$2,880Total liabilities and equity$2,880

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