Question
3.) COST OF COMMON EQUITY Percy Motors has a target capital structure of 40% debt and 60% common equity, with no preferred stock. The yield
3.) COST OF COMMON EQUITY Percy Motors has a target capital structure of 40% debt and 60% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 9%, and its tax rate is 40%. Percy's CFO estimates that the company's WACC is 9.21%. What is Percy's cost of common equity? Express as a percentage rounded to TWO decimal places, example: 0.05155 = 5.16%.
4.) COST OF COMMON EQUITY The future earnings, dividends, and common stock price of Carpetto Technologies Inc. are expected to grow 8% per year. Carpetto's common stock currently sells for $26.20 per share; its last dividend was $2.00; and it will pay a $2.44 dividend at the end of the current year. Using the DCF approach, what is its cost of common equity?
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