Question $8(1$ point$)$

Patton Paints Corporation has a target capital structure of $36\mathrm{.}00\%$ debt and $64\mathrm{.}00\%$ common equity, with no preferred stock. Its before$-$tax cost of debt is $8\mathrm{.}00\%,$ and its marginal tax rate is $30\mathrm{.}00\%.$ The current stock price is $$22\mathrm{.}50.$ The last dividend was $$2\mathrm{.}20,$ and it is expected to grow at a $5\mathrm{.}50\%$ constant rate.

a$)$ What is its cost of common equity?

b$)$ What is its WACC?

a$)15\mathrm{.}82\%$; b$)12\mathrm{.}14\%$

a$)15\mathrm{.}60\%$; b$)12\mathrm{.}91\%$

a$)16\mathrm{.}16\%$; b$)13\mathrm{.}26\%$

a$)10\mathrm{.}00\%$; b$)8\mathrm{.}45\%$

a$)15\mathrm{.}60\%$; b$)12\mathrm{.}01\%$