The Paulson Company's year-end balance sheet is shown below. Its cost of common equity is
14%
, its before-tax cost of debt is
9%
, and its marginal tax rate is
25%
. 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
$1,133
. The firm has 576 shares of common stock outstanding that sell for
$4.00
per share. \table[[Assets,Liabilities And Equity],[Cash,
$120
,Accounts payable and accruals,
$10
( please see photo)

Question

The Paulson Company's year-end balance sheet is shown below. Its cost of common equity is

14%

, its before-tax cost of debt is

9%

, and its marginal tax rate is

25%

. 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

$1,133

. The firm has 576 shares of common stock outstanding that sell for

$4.00

per share. \table[[Assets,Liabilities And Equity],[Cash,

$120

,Accounts payable and accruals,

$10

( please see photo)

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