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    Weighted Average Cost of Capital (WACC)

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    4. (P10-9) WACC The Patrick Company's cost of common equity is 16 percent, its before-tax cost of debt is 13 percent, and its marginal tax rate is 40 percent. The stock sells at book value. Using the following balance sheet, calculate Patrick's WACC.

    Assets
    Cash $120
    Accounts receivable 240
    Inventories 360
    Plant and Equipment, net 2,160
    Total assets $2,880

    Liabilities
    Long Term Debt $1,152
    Common Equity $1,728
    Total liability & equity $2,880

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    4.  (P10-9) WACC The Patrick Company's cost of common equity is 16 percent, its before-tax cost of debt is 13 percent, and its marginal tax rate is 40 percent. The stock sells at book value. Using the following balance sheet, calculate Patrick's WACC.

    Assets
    Cash ...

    Solution Summary

    A weighted average cost of capital is calculated.

    $2.19