Palencia paints corporation has a target capital structure, Financial Management

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Palencia paints corporation has a target capital structure

Cost of Common Equity and WACC

Palencia 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 12% and its marginal tax rate is 40%. The current stock price is P0 = $32.50. The last dividend was D0 = $3.25, 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.

r_s = %

WACC = %

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Financial Management: Palencia paints corporation has a target capital structure

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