Target capital structure-debt and common equity

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Reference no: EM131070573

Patton 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 12% and its marginal tax rate is 40%. The current stock price is P0 = $33.00. The last dividend was D0 = $3.75, and it is expected to grow at a 7% constant rate. What is its cost of common equity and its WACC.

Reference no: EM131070573

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