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Aaa company has a target capital structure of 70 debt and

COST OF COMMON EQUITY AND WACC AAA Company has a target capital structure of 70% debt and 30% common equity, with no preferred stock. Its before-tax cost of debt is 11%, and its marginal tax rate is 35%. The current stock price is $25.00. The last dividend was $2, and it is expected to grow at a 6% constant rate.

a. What is its cost of common equity?

b. What is its WACC?

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Financial Management: Aaa company has a target capital structure of 70 debt and

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Financial Management: Aaa company has a target capital structure of 70 debt and

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