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Patton Paints Corporation has a target capital structure of 60% debt and 40% common equity, with no preffered stock. Its before-tax cost of debt is
Patton Paints Corporation has a target capital structure of 60% debt and 40% common equity, with no preffered stock. Its before-tax cost of debt is 12%, and its marginal tax rate is 40%. The current stock price is P= $22.50. The last dividend was D= $2.00, and it is expected to grow at a 7% constant rate. What is its WACC?
(Number has been changed) Patton Paints Corporation has a target capital structure of 60% debt and 40% 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 P=$22.50. The last dividend was D0=$2.00, and it is expected to grow at a 7% constant rate. What is its WACC? A) 11.28% B) 10.38% C) 11.68% D) 10.68% E) 10.92% Step by Step Solution
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