Question
Patton Paints Corporation has a target capital structure of 45% debt and 55% common equity, with no preferred stock. Its before-tax cost of debt is
Patton Paints Corporation has a target capital structure of 45% debt and 55% common equity, with no preferred stock. Its before-tax cost of debt is 13% and its marginal tax rate is 40%. The current stock price is P0 = $23.50. The last dividend was D0 = $3.25, and it is expected to grow at a constant rate of 6%. What is its cost of common equity and it's WACC?
R=?
WASS=?
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Principles of Corporate Finance
Authors: Richard Brealey, Stewart Myers, Franklin Allen
13th edition
978-1260013900
