3. Problem 10.03 (Cost of Common Equity) eBook...
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3. Problem 10.03 (Cost of Common Equity)
| eBook Pearson Motors has a target capital structure of 40% debt and 60% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 9%, and its tax rate is 25%. Pearson's CFO estimates that the company's WACC is 10.80%. What is Pearson's cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places. |
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