Question

common stock outstanding that sell for $4.00 per share. The data has been collected in the Microsoft Excel Online below. Open the spreadsheet and perform the required analysis to answer the question below. Open spreadsheet Calculate Paulson's WACC using market-value weights. Round your answer to two decimal places. Do not round your intermediate calculations. Assets Cash $ 120 Accounts receivable 240 Inventories 360 Plant and equipment, net 2,160 Liabilities And Equity Accounts payable and $ 10 accruals Short-term debt 50 Long-term debt $1,140 Common equity 1,680 Total liabilities and $2,880 equity Total assets $2,880 12.29 52% Check My Work

Answer 1

D E F G B28 foc =B23*B26+B24*B3 A B 1 WACC 2 3 Cost of common equity 16.00% 4 Before-tax cost of debt 8.00% 5 Marginal tax rate 40.00% 6 Common shares outstanding 576 7 Current stock price 4.00 8 Long-term debt sells at par value Yes 9 S $ S 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 50.00 1,140.00 1,680.00 2,880.00 $ Formulas 10 Balance Sheet: 11 Assets 12 Cash $ 13 Accounts receivable 14 Inventories $ 15 Plant and equipment, net $ 16 Total assets $ 17 18 19 Market value of total debt $ 20 Market value of common equity 21 Total capital $ 22 23 Percentage of debt 24 Percentage of common equity 25 26 After-tax cost of debt 27 28 Weighted Average Cost of Capital (WACC) L 29 1,140.00 2,304.00 3,444.00 =E14 =B6*B7 =SUM(B19:320) 33.10% 66.90% =B19/B21 =B20/B21 4.80% =B4*(1-B5) 12.29%! =B23*B26+B24*B3