Question
Cost of common Equity. Pearson Motors has a target capital structure of 30% debt and 70% common equity, with no preferred stock. The yield to
Cost of common Equity. Pearson Motors has a target capital structure of 30% debt and 70% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds 9%, and its tax rate is 25%. Pearson's CFO estimates that the company's WACC is 10.50%. What is Pearson's cost of common equity?
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Basic Finance An Introduction to Financial Institutions, Investments and Management
Authors: Herbert B. Mayo
11th Edition
1285425790, 1285425795, 9781305464988 , 978-1285425795
