Calculate paulson wacc using market-value weights

Assignment Help Finance Basics
Reference no: EM133068951

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 10%, and its marginal tax rate is 25%. 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.

Assets

Liabilities And Equity

Cash

$ 120

Accounts payable and accruals

$ 10

Accounts receivable

240

Short-term debt

51

Inventories

360

Long-term debt

1,140

Plant and equipment, net

2,160

Common equity

1,679

Total assets

$2,880

Total liabilities and equity

$2,880

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

Reference no: EM133068951

Questions Cloud

Why ethics in finance is important : Why ethics in finance is important? What are the ethical issues in finance?
Major risks and challenges in 2009 : Please refer to Saudi Arabia - write an article about risk assessment on the Saudi Economy from the past to the present and in the future.
Calculate the prospective costs of debt : Assume that Angostura had not entered the US marketplace yet but is considering establishing both manufacturing and distribution facilities in the United States
What is the consolidated net income in each of these years : The subsidiary reported net income of $70,000 in 2020. What is the consolidated net income in each of these two years
Calculate paulson wacc using market-value weights : 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 10%, and its marginal tax rate is
Principles of information systems : Discuss the interaction of application software with a computer's hardware and operating system. Compare proprietary software, open-source applications,
Compute accumulated depreciation by using MACRS : Compute accumulated depreciation by using MACRS and optional straight-line method for the 3-year period ending December 31, 2021
What is the wacc for the last dollar : Olsen Outfitters Inc. believes that its optimal capital structure consists of 55% common equity and 45% debt, and its tax rate is 25%.
Compare price risk and reinvestment risk : Compare price risk (interest rate risk) and reinvestment risk in relation to bonds?

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd