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COST OF COMMON EQUITY AND WACC Palencia Paints Corporation has a target capital structure of 30% debt and 70% common equity, with no preferred stock.

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COST OF COMMON EQUITY AND WACC 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 13%, and its marginal tax rate is 40%. The current stock price is Po - $26.00. The last dividend was Do = $2.50, and it is expected to grow at a 4% constant rate. What is its cost of common equity and its WACC? Round your answers to two decimal places. Do not round your intermediate calculations. = a. rs = % b. WACC = %

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