eBook

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 is $10\%,$ and its tax rate is $25\%.$ Pearson's CFO estimates that the company's WACC is $10\mathrm{.}80\%.$ What is Pearson's cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places.

$\%$