0-8 COST OF COMMON EQUITY AND WACC Palencia 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 25%. The current stock price is P = $22.00. The last dividend was D = $2.25, and it is expected to grow at a 5% constant rate. What is its cost of common equity and its WACC? C WACC 0 The Paulson Company's year-end balance sheet is shown here. Its cost of common

Essentials Of Investments
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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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COST OF COMMON EQUITY AND WACC Palencia 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 25%. The current stock price is P, = $22.00. The last dividend was Do - $2.25, and it is expected to grow at a 5% constant rate. What is its cost of common equity and its WACC?

0-8 COST OF COMMON EQUITY AND WACC Palencia 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 25%. The current stock price is P = $22.00. The
last dividend was D = $2.25, and it is expected to grow at a 5% constant rate. What is its
cost of common equity and its WACC?
C
WACC
0
The Paulson Company's year-end balance sheet is shown here. Its cost of common
Transcribed Image Text:0-8 COST OF COMMON EQUITY AND WACC Palencia 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 25%. The current stock price is P = $22.00. The last dividend was D = $2.25, and it is expected to grow at a 5% constant rate. What is its cost of common equity and its WACC? C WACC 0 The Paulson Company's year-end balance sheet is shown here. Its cost of common
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