Problempatton paints corporation has a target capital, Ask an Expert

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Problem:

Patton Paints Corporation has a target capital structure of 30% debt and 70% common equity, with no preferred stock. Its before-tax cost of debt is 10% and its marginal tax rate is 40%. The current stock price is P₀ = $21.00. The last dividend was D₀ = $2.75, and it is expected to grow at a 5% constant rate.

Required:

Question: What is its cost of common equity and its WACC? Round your answers to two decimal places.

Note: Please provide through step by step calculations.

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Category:- Basic Finance
Reference No.:- M91148774

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