Palencia Paints Corporation has a target capital structure of
45% debt and 55% common equity, with no preferred stock. Its
before-tax cost of debt is 10%, and its marginal tax rate is 25%.
The current stock price is P0 = $34.00. The last
dividend was D0 = $3.50, and it is expected to grow at
an 8% constant rate. What is its cost of common equity and its
WACC? Do not round intermediate calculations. Round your answers to
two decimal places.
Palencia Paints Corporation Has A Target Capital Structure Of 45 Debt And 55 Common Equity With No Preferred Stock I 1 (7.71 KiB) Viewed 87 times
Palencia Paints Corporation has a target capital structure of 45% debt and 55% common equity, with no preferred stock. Its before-tax cost of debt is 10%, and its marginal tax rate is 25%. The current stock price is Pp = $34.00. The last dividend was Dp = $3.50, and it is expected to grow at an 8% constant rate. What is its cost of common equity and its WACC? Do not round intermediate calculations. Round your answers to two decimal places. WACC =
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