4 points Save Assume that you have been hired as a consultant by CGT, amajor pro
ID: 2661595 • Letter: 4
Question
4 points Save Assume that you have been hired as a consultant by CGT, amajor producer of chemicals and plastics, including plastic grocerybags, styrofoam cups, and fertilizers, to estimate the firm'sweighted average cost of capital. The balance sheet and someother information are provided below.
Assets
Currentassets
$38,000,000
Net plant,property, and equipment
$101,000,000
Totalassets
$139,000,000
Liabilities and Equity
Accountspayable
$10,000,000
Accruals
$9,000,000
Currentliabilities
$19,000,000
Long-termdebt (40,000 bonds, $1,000 par value)
$40,000,000
Totalliabilities
$59,000,000
Commonstock (10,000,000 shares)
$30,000,000
Retainedearnings
$50,000,000
Totalshareholders' equity
$80,000,000
Totalliabilities and shareholders' equity
$139,000,000
11.92%
11.25%
11.81%
12.48%
8.89%
Currentassets
$38,000,000
Net plant,property, and equipment
$101,000,000
Totalassets
$139,000,000
Explanation / Answer
x.
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