Finance-The Patrick Company’s year-end balance sheet is shown below.

| January 30, 2017

Question
The Patrick Company’s year-end balance sheet is shown below. Its cost of common equity is 16%, its before-tax cost of debt is 13%, 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 $1,152. The firm has 576 shares of common stock outstanding that sell for $4.00 per share. Calculate Patrick’s WACC using market-value weights.

Assets:

Cash $130, AR $240,Inventories $360, Plant & equip (net), $2,160. Total assets: $2,890

Liabilities & Equity:

AP and accruals $10, Short term debt $52, Long term debt $1,100, Common equity $1,728. Total liabilities and equity: $2,890

I need assistance to understand how to calculate this answer.

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