2. 10.08 (cost of common equity and wacc)

3. 10.10 (wacc)

2. Problem 10.08 (Cost of Common Equity and WACC) Palencla Paints Corporation has a target capital structure of 30% debt and 70% common equity, with no preferred stock. Its before-tax cost of debt is 12%, and its marginal tax rate is 25%. The current stock price is P0=$24,00. The last dividend was D0=$3.25, and it is expected to grow at a 5% constant rate. What is its cost of common equity and its WACC? Do not round intermediate calculations. Round your answers to two decimal places. fi= wrec = Continue without saving Olsen Outfitters inc. belleves that its optimal capital structure consists of 00% common equity and 40% debt, and its tax rate is 25%. Olten must raise additional captal to fund its upcoming expansion. The firm will have 53 million of retained earnings with a cost of f4=12%. New common stock in an amount up to $6 million would have a cost of re=13.0%, Furthermore, Oisen can raise up to $3 mallion of debt at an interest rate of rd=9% and an additional $5mils on of debt at rd=10%. The CFO estimates that a proposed expansion would require an investment of $7.2 million. What is the WAcC for the last doliar raised to complete the expansion? Round your answer to two decimal places. Continue without saving