WACC
The Pawlson Company's year-end balance sheet is shown below. Its cost of common equity is 16%, 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 $1,140. The firm has 576 shares of common stock outstanding that sell for $4.00 per share.
Assets Liabilities And Equity
Cash $ 120 Accounts payable and accruals $ 10
Accounts receivable 240 Short-term debt 40
Inventories 360 Long-term debt 1,100
Plant and equipment, net 2,160 Common equity 1,730
Total assets $2,880 Total liabilities and equity $2,880
A. Calculate Pawlson's WACC using market-value weights. Round your answer to two decimal places. Do not round your intermediate calculations. %