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

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Cost of Common Equity

Pearson 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 12%, and its tax rate is 40%. Pearson's CFO estimates that the company's WACC is 14.40%. What is Pearson's cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places.

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Financial Management, Finance

Category:- Financial Management
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