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Palencia Paints Corporation has a target capital structure of 25% debt and 75% common equity,...

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Finance

Palencia Paints Corporation has a target capital structure of 25% debt and 75% common equity, with no preferred stock. Its before-tax cost of debt is 9%, and its marginal tax rate is 40%. The current stock price is P0 = $33.50. The last dividend was D0 = $3.00, and it is expected to grow at a 7% 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.

  1. rs = %
  3. WACC = %

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