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Cost of common equity and wacc

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Cost of Common Equity and WACC

Palencia Paints Corporation has a target capital structure of 40% debt and 60% common equity, with no preferred stock. Its before-tax cost of debt is 9% and its marginal tax rate is 40%. The current stock price is P0 = $26.00. The last dividend was D0 = $3.75, and it is expected to grow at a 4% constant rate. What is its cost of common equity and its WACC?

Reference no: EM132404442

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