The Paulson Company's year-end balance sheet is shown below. Its cost of common equity is 15%, its before-tax cost of debt is 11%, 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 $1,099. 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 | 49 | |
Inventories | 360 | Long-term debt | 1,050 | |
Plant and equipment, net | 2,160 | Common equity | 1,771 | |
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.
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