eBook

Palencia Paints Corporation has a target capital structure of $25\%$ debt and $75\%$ common equity, with no preferred stock. Its before$-$tax cost of debt is $10\%,$ and its marginal tax rate is $25\%.$ The current stock price is $P_0=$$$32\mathrm{.}50.$ The last dividend was $D_0=$$$3\mathrm{.}25,$ and it is expected to grow at an $8\%$ constant rate. What is its cost of common equity and its WACC? Do not round intermediate calculations. Round your answers to two decimal places.

$r_s=\%$

WACC$=\%$

Check My Work

Icon Key

Problem $10\mathrm{.}08($Cost of Common Equity and WACC$)$

Question $7$ of $15$

Save