WACC The Pawson Companys yearend balance sheet is shown belo

WACC The Pawson Company\'s year-end balance sheet is shown below. Its cost of common equity is 17%, its 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\'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 Assets Liabilities And Equity Cash $ 120 $ 10 Accounts receivable Inventories Plant and equipment, net Total assets 240 360 2,160 $2,880 Accounts payable and accruals Short-term debt Long-term debt Common equity Total liabilities and equity 45 1,060 1,765 $2,880 Calculate Pawlson\'s WACC using market-value weights. Round your answer to two decimal places. Do not round your intermediate calculations

Solution

WACC = 13.82%

	Amount	weight	cost	weight*cost
equity	2,304.00	0.6759	17.0000%	0.1149
debt	1,105.00	0.3241	7.2000%	0.0233