Patton Paints Corporation has a target capital structure of 35% debt and 65% 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 = $30.00. The last dividend was D0 = $2.50, 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.
rs = %
WACC = %
cost of common equity = 2.50*1.08/30 + 8%
cost of common equity = 17.00%
WACC = 13.15%
Get Answers For Free
Most questions answered within 1 hours.