Pearson Motors has a target capital structure of 35% debt and 65% common equity, with no preferred stock. The yield to m

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answerhappygod
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Pearson Motors has a target capital structure of 35% debt and 65% common equity, with no preferred stock. The yield to m

Post by answerhappygod »

Pearson Motors has a target capital structure of 35% debt and
65% common equity, with no preferred stock. The yield to maturity
on the company's outstanding bonds is 10%, and its tax rate is 25%.
Pearson's CFO estimates that the company's WACC is 10.30%. What is
Pearson's cost of common equity? Do not round intermediate
calculations. Round your answer to two decimal places.
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