Question

Excel Online Structured Activity: WACC The Paulson Company's year-end balance sheet is shown below. Its cost of common equity is 17%, its before-tax cost of debt is 11%, 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 $1,105. 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. х Open spreadsheet Calculate Paulson'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 45 Long-term debt $1,060 Inventories 360 Plant and equipment, net 2,160 Total assets $2,880 Common equity 1,765 Total liabilities and equity $2,880

Answer 1

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W ENG 23:30 31-07-2020 66 34 E1 A B C D E F 1 WACC PAULSON w N 3 COST OF COMMON EQUITY 4 COST OF DEBT (BEFORE TAX) 5 TAX RATE 6 COMMONS SHARES OUTSTANDING 7 CURRENT PRICE 8 LONG TERM DEBT SELLS AT PAR VALUE 17% 11% 40% 576.00 4.00 YES 9 10 BALANCE SHEET 11 ASSETS 120 10 240 45 LIABILITIES & EQUITY ACCOUNTS PAYABLE AND ACCURALS SHORT TERM DEBT LONG TERM DEBT COMMON EQUITY TOTAL LIABILITIES AND EQUITY 360 12 CASH 13 ACCOUNTS RECEIVABLE 14. INVENTORIES 15 PLANT & EQUIPMENT, NET 16 TOTAL ASSETS 17 1060 2160 1765 2880 2880 18 1105 2304 19 MARKET VALUE OF DEBT 20 MARKET VALUE OF COMMON EQUITY 21 TOTAL CAPITAL 22 [=E13+E14] [=B6*B7] [=SUM(B19:B20)] 3409 PAUL DOUBLE WACC EXCEL Sheet5 SLOPE SML Sheet6 P3 58 | 59 Inai ORGANIC PRODUCE WACC 510 MM PERSONAL S1 FUI ... +

W ENG 23:30 31-07-2020 E 66 34 E30 A B C D E F 9 LIABILITIES & EQUITY ACCOUNTS PAYABLE AND ACCURALS 120 10 10 BALANCE SHEET 11 ASSETS 12 CASH 13 ACCOUNTS RECEIVABLE 14. INVENTORIES 15 PLANT & EQUIPMENT, NET 16 TOTAL ASSETS 240 SHORT TERM DEBT 45 360 1060 2160 LONG TERM DEBT COMMON EQUITY TOTAL LIABILITIES AND EQUITY 1765 2880 2880 17 1105 2304 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 [=E13+E14] (=B6*B7] [=SUM(B19:B20)] 3409 32.41% 67.59% [=B19/B21] (=B20/B21] 25 6.60% [=B4*(1-B5)] 26 AFTER TAX COST OF DEBT 27 28 WACC 13.63% [=B23*(B26) + (B24)*(B3)] 29 30 - PAUL DOUBLE WACC EXCEL Sheet5 SLOPE SML Sheet6 P3 S8 S9 ORGANIC PRODUCE WACC 510 MM PERSONAL S1 FUI ... +