Compute the cost of common equity

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Question: Cost of Common Equity and WACC Palencia Paints Corporation has a target capital structure of 45% debt and 55% common equity, with no preferred stock. Its before-tax cost of debt is 11% and its marginal tax rate is 40%. The current stock price is P_0 = $24.00. The last dividend was D_0 = $3.50, and it is expected to grow at a 6% 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.

Reference no: EM131962856

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