8. Problem 10.08 (Cost of Common Equity and WACC) eBook Palencia 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 9%, and its marginal tax rate is 25%. The current stock price is Po = $33.50. The last dividend was Do = $3.00, 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. rs = % WACC = % 12. Problem 10.17 (Calculation of g and EPS) eBook Sidman Products's common stock currently sells for $40 a share. The firm is expected to earn $4.40 per share this year and to pay a year-end dividend of $2.80, and it finances only with common equity. a. If investors require an 11% return, what is the expected growth rate? Do not round intermediate calculations. Round your answer to two decimal places. % b. If Sidman reinvests retained earnings in projects whose average return is equal to the stock's expected rate of return, what will be next year's EPS? (Hint: g = (1 - Payout ratio)ROE). Do not round intermediate calculations. Round your answer to the nearest cent. $ per share