WACC The Pawlson Company's year-end balance sheet is shown below. Its cost of common equity is 14%, its before-tax cost of debt is 10%, 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 $1,155.
The firm has 576 shares of common stock outstanding that sell for $4.00 per share. Calculate Pawlson's WACC using market-value weights. Round your answer to two decimal places. Do not round your intermediate calculations.
Assets Liabilities And Equity
Cash $ 120 Accounts payable and accruals $ 10
Accounts receivable 240 Short-term debt 55
Inventories 360 Long-term debt $1,100
Plant and equipment, net 2,160 Common equity 1,715
Total assets $2,880 Total liabilities and equity $2,880
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