COST OF COMMON EQUITY AND WACC Palencia Paints Corporation has a target capital structure of...
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COST OF COMMON EQUITY AND WACC Palencia Paints Corporation has a target capital structure of 45% debt and 55% common equity, with no preferred stock. Its before-tax cost of debt is 11%, and its marginal tax rate is 40%. The current stock price is Po = $23.00. The last dividend was Do = $3.00, and it is expected to grow at a 8% constant rate. What is its cost of common equity and its WACC? Round your answers to two decimal places. Do not round your intermediate calculations. a. rs = % b. WACC = %
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