Patton Paints Corporation has a target capital structure of 35.60% debt and 64.40%common equity, with no preferred stock. Its before-tax cost of debt is 7.80%, and its marginal tax rate is 30.00%. The current stock price is $22.00. The last dividend was $2.10, and it is expected to grow at a 5.40% constant rate.
a) What is its cost of common equity?
b) What is its WACC?
a)9.26%; b)8.03%
a)15.46%; b)11.57%
a)14.95%; b)11.57%
a)15.46%; b)11.90%
a)9.55%; b)8.09%