Question
Patton Paints Corporation has a target capital structure of 39.60% debt and 60.40% common equity, with no preferred stock. Its before-tax cost of debt is
Patton Paints Corporation has a target capital structure of 39.60% debt and 60.40% common equity, with no preferred stock. Its before-tax cost of debt is 9.80%, and its marginal tax rate is 30.00%. The current stock price is $27.00. The last dividend was $3.10, and it is expected to grow at a 6.40% constant rate.
a) What is its cost of common equity?
b) What is its WACC?
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Personal Finance
Authors: Jack Kapoor, Les Dlabay, Robert Hughes
4th Edition
0256147175, 978-0256147179
