Question
Patton Paints Corporation has a target capital structure of 40% debt and 60% common equity, with no preferred stock. Its before-tax cost of debt is
Patton Paints Corporation has a target capital structure of 40% debt and 60% common equity, with no preferred stock. Its before-tax cost of debt is 12% and its marginal tax rate is 40%. The current stock price is P0 = $22.50. The last dividend was D0 = $2.00, and it is expected to grow at a constant rate of 7%. What is its cost of common equity and it's WACC?
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The Public Private Partnership Handbook
Authors: Malcolm Morley
1st Edition
0749474262, 978-0749474263
