WACC Assignment | Custom Assignment Help
September 16th, 2019
2.Determine the Weighted Average Cost of Capital (WACC) (where ROE can be viewed as the Cost of Equity)?
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For the Year Ended December 31, 2009
- Sales (all on credit) …………………………………………………………… $ 4,000,000
- Cost of Goods Sold…………………………………………………………………3,000,000
- Gross Profit………………………………………………………………………….$ 1,000,000
- Selling and Administrative Expenses……………………………………. 450,000
- Operating Profit ……………………………………………………………………$ 550,000
- Interest Expense…………………………………………………………………… 50,000
- Extraordinary Loss…………………………………………………………………. 200,000
- Earnings Before Taxes……………………………………………………………$ 300,000
- Income Taxes (33%)………………………………………………………………. 100,000
- Net Income…………………………………………………………………………….$ 200,000
SAXTON COMPANY
Balance Sheet
As of December 31, 2009
Assets
- Cash…………………………………………………………………………… $ 30,000
- Accounts Receivable………………………………………………….. 350,000
- Marketable Securities ……………………………………………….. 50,000
- Inventory……………………………………………………………………. 370,000
- Total Current Assets……………………………………………………. $ 800,000
- Net Plant and Equipment…………………………………………….. 800,000
- Total Assets………………………………………………………………….$ 1,600,000
Liabilities and Stockholders’ Equity
- Accounts Payable…………………………………………………………..$ 50,000
- Notes Payable……………………………………………………………….. 250,000
- Total Current Liabilities…………………………………………………..$ 300,000
- Long Term Liabilities………………………………………………………… 300,000
- Total Liabilities ………………………………………………………………..$ 600,000
- Common Stock…………………………………………………………………. 400,000
- Retained Earnings…………………………………………………………….. 600,000
- Total Stockholders’ Equity……………………………………………….$ 1,000,000
