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)

10.68%

B)

11.28%

C)

10.38%

D)

11.68%

E)

10.92%

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)

10.68%

B)

11.28%

C)

10.38%

D)

11.68%

E)

10.92%