Question

Excel Online Structured Activity: WACC The Paulson Company's year-end balance sheet is shown below. Its cost of common equity is 18%, its before-tax cost of debt is 9%, 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 $1,173 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. XEE 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 Liabilities And Equity Accounts payable and $ 10 accruals Short-term debt Long-term debt $1,130 Common equity Accounts receivable 240 360 Inventories Plant and equipment, net 2,160 1.697

Answer 1

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ke - Microsoft Excel (Product Activation Failed) Add-Ins File Home Insert Page Layout Formulas Data Review View - 2x % Cut General Wrap Text Merge & Center - $ % , :.: Conditional Format Formatting as Table Styles Cell Styles Insert Delete Format Σ AutoSum : A Fill Sort & Clear Filter Editing Find & Select Number Cells E Calibri -11AA = = = Dr E Copy Paste Format Painter BI U D- DA Clipboard Font Alignment E2 - fix A 1 WACC 2 3 COST OF COMMON EQUITY 18% 4 COST OF DEBT (BEFORE TAX) 9% 5 TAX RATE 40% 6 COMMONS SHARES OUTSTANDING 576.00 7 CURRENT PRICE 4.00 8 LONG TERM DEBT SELLS AT PAR VALUE YES 9 120 10 BALANCE SHEET 11 ASSETS 12 CASH 13 ACCOUNTS RECEIVABLE 14 INVENTORIES 15 PLANT &EQUIPMENT, NET 16 TOTAL ASSETS 10 43 240 360 2160 2880 LIABILITIES & EQUITY ACCOUNTS PAYABLE AND ACCURALS SHORT TERM DEBT LONG TERM DEBT COMMON EQUITY TOTAL LIABILITIES AND EQUITY 1130 1697 2880 17 18 19 MARKET VALUE OF DEBT I NTL CAP BUD LEASING Rea ferences 1173 clean [=E13+E14] YIELD bond portfolio cap stru WACC H PV, FV, ANNUITY DIR right RESI ex div DIV POLICY NAME DIV YIELD ETEMADI 513 Sheet2 DOUBLE Sheeti BO 130% SPOR 9 * R 40 ENG 06-11-2019

ke - Microsoft Excel (Product Activation Failed) Add-Ins View - 2x Dr General File Home Insert Page Layout Formulas Data Review * Cut Calibri -11AA = = = E Copy Paste Format Painter BI U D- DA Clipboard Font Wrap Text Merge & Center - $ % , :.: Conditional Format Formatting as Table Styles Cell Styles Insert Delete Format Σ AutoSum : A Fill Sort & Clear Filter Editing Find & Select Alignment Number Cells E28 А 10 43 120 240 360 2160 2880 LIABILITIES & EQUITY ACCOUNTS PAYABLE AND ACCURALS SHORT TERM DEBT LONG TERM DEBT COMMON EQUITY TOTAL LIABILITIES AND EQUITY 1130 1697 2880 1173 10 BALANCE SHEET 11 ASSETS 12 CASH 13 ACCOUNTS RECEIVABLE 14 INVENTORIES 15 PLANT &EQUIPMENT, NET 16 TOTAL ASSETS 17 18 19 MARKET VALUE OF 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 WACC I NTL CAP BUD LEASING PV, FV, ANNUITY Rea 1 ferences 2304 3477 (=E13+E14] (=B6*B7] [=SUM(B19:B20)] 33.74% 66.26% [=B19/B21] [=B20/B21] 5.40% [=B4*(1-B5)] 13.75% DIR right clean (=B23*(B26) + (B24)*(B3)] YIELD bond portfolio cap stru WACC RESI ex div DIV POLICY H NAME Sheeti DIV YIELD ETEMADI 513 Sheet2 DOUBLE BO 130% ODOB 9 * 10 ENG 06-11-2019