8. Problem 10.08 (Cost of Common Equity and WACC) ...
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8. Problem 10.08 (Cost of Common Equity and WACC)
| eBook Palencia Paints Corporation has a target capital structure of 35% debt and 65% common equity, with no preferred stock. Its before-tax cost of debt is 9%, and its marginal tax rate is 25%. The current stock price is P0 = $25.00. The last dividend was D0 = $3.00, and it is expected to grow at a 4% constant rate. What is its cost of common equity and its WACC? Do not round intermediate calculations. Round your answers to two decimal places. rs = ____% WACC = ____% |
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