Target capital structure-what is its cost of common equity

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Reference no: EM13919588

Patton Paints Corporation has a target capital structure of 35.60% debt and 64.40%common equity, with no preferred stock. Its before-tax cost of debt is 7.80%, and its marginal tax rate is 30.00%. The current stock price is $22.00. The last dividend was $2.10, and it is expected to grow at a 5.40% constant rate.

a) What is its cost of common equity?

b) What is its WACC?

a)9.26%; b)8.03%

a)15.46%; b)11.57%

a)14.95%; b)11.57%

a)15.46%; b)11.90%

a)9.55%; b)8.09%

Reference no: EM13919588

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