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Cost of common equity and wacc

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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 10%, and its marginal tax rate is 25%. The current stock price is Po = $26.50. The last dividend was Do = $2.50, and it is expected to grow at a 7% constant rate. What is its cost of common equity and its WACC?

Reference no: EM133118389

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