Chapter 10 The Cost of Capital 10-3 Percy Motors has a target capital structure of 40% debt and COST OF COMMON EQUITY 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 9.96%, what is Percy's cost of common equity? COST OF EQUITY WITH AND wITHOUT FLOTATION Javits & Sons's common stock cur- rently trades at $30.00 a share. It is expected to pay an annual dividend of $3.00 a share at the end of the year (Di-$3.00), and the constant growth rate is 5% a year. 10-4 What is the company's cost earnings? If the company issued new stock, it would incur a 10% flotation cost, what would be the cost of equity from new stock? of common equity if all of its equity comes from retained a. b