Patton paints corporation has a target capital structure of, Finance Basics

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Patton paints corporation has a target capital structure of

Question: Cost of Common Equity and WACC

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 8% and its marginal tax rate is 40%. The current stock price is P0 = $31.50. The last dividend was D0 = $4.00, 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.

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Finance Basics: Patton paints corporation has a target capital structure of

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