Patrick's WACC
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The Patrick Companyâ??s cost of common equity is 16%, its before-tax cost of debt is 13%, and its marginal tax rate is 40%. The stock sells at book value. Using the following balance sheet, calculate Patrickâ??s WACC. Please show all work.
Assets Liabilities and Equity
Cash $120
Accounts Receivable 240
Inventories 360 Long-term debt $1,152
Plant and equipment, net 2,160 Common Equity 1,728
Total Assets $2,880 Total liabilities and Equity $2,880
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The response provides the steps to compute the WACC.
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The Patrick Companyâ??s cost of common equity is 16%, its before-tax cost of debt is 13%, and its marginal tax rate is 40%. The stock sells at book value. Using the following balance ...
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