10-8 COST OF COMMON EQUITY AND WACC 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 8%, and its marginal tax rate is 40%. The current stock price is Po $22.00. The last dividend was D0-$225, and it is expected to grow at a 5% constant rate. What is its cost of common equity and its WACC