Question

SAGE MINDTAP ne Activity: WAC Video Excel Online Structured Activity: WACC The Paulson Company's year and balance sheet is shown below. Its cost of common equity is 14, before tax cost of debt is 12.and its marginal tax rate is 40%. Assume that the firm's long-term debt sells at par value. The firm total debt which is the sum of the company's short-term debt and long-term debt, equals 51,190. 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 Open spreadsheet ng market value weights Round your answer to two decimal places. Do not round your Calculate Paulson's WACC Intermediate calculations Liabilities And Equity Back

Answer 1

Cost of Equity Pre Tax Cost of Debt Marginal Tax Rate After Tax Cost of Debt 14% 12% 40% 7.20% Total Debt Total Equity Total debt & Equity $ $ $ 1,190 2,304 3,494 Debt Equity Total Weight 34.06%! 65.94% 100.00% Cost 7.20% 14.00% WACC 2.45% 9.23% 11.68%

Cost of Equity Pre Tax Cost of Debt Marginal Tax Rate After Tax Cost of Debt 14% 12% 40% C4*(1-C5) Total Debt Total Equity Total debt & Equity $ $ $ 1,190 2,304 3,494 Cost C6 Debt Equity Total Weight C8/C10 09/10 0.00% WACC C15*D15 C16*D16 SUM(E15:E16) c3