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Cost of Common Equity and WACC

Patton Paints Corporation has a target capital structure of 25% debt and 75% common equity, with no preferred stock. It’s before-tax cost of debt is 8% and its marginal tax rate is 40%. The current stock price is P0 = $22.50. The last dividend was D0 = $2.25 and it is expected to grow at a 6% constant rate. What is its cost of common equity and it’s WACC? Round your answers to two decimal places.

rs = %

WACC = %

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91271621

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