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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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A weighted average cost of capital is calculated.

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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 ...

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