Cost of common equity percy motors has a target capital, Ask an Expert

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COST OF COMMON EQUITY Percy Motors has a target capital structure of 40% debt and 60% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 9%, and its tax rate is 40%. Percy's CFO estimates that the company's WACC is 8.40%. What is Percy's cost of common equity? Express as a percentage rounded to TWO decimal places, example: 0.05155 = 5.16%.

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