10.08

10.09

Palencia Paints Corporation has a target capital structure of 40% debt and 60% common equity, with no preferred stock. Its before-tax cost of debt is 13%, and its marginal tax rate is 25%. The current stock price is Po = $30.00. The last dividend was Do = $3.50, and it is expected to grow at a 7% constant rate. What is its cost of common equity and its WACC? Do not round intermediate calculations. Round your answers to two decimal places. Travis Industries plans to issue perpetual preferred stock with an $11.00 dividend. The stock is currently selling for $91.00, but flotation costs will be 6% of the market price, so the net price will be $85.54 per share. What is the cost of the preferred stock, including flotation? Round your answer to two decimal places