Percy cost of common equity, Accounting Basics

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Percy cost of common equity

Problem:

Percy Motors has a target capital structure of 45% debt and 55% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 8%, and its tax rate is 40%. Percy's CFO estimates that the company's WACC is 14.50%.

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Question: What is Percy's cost of common equity?

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Accounting Basics: Percy cost of common equity

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Accounting Basics: Percy cost of common equity

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