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COST OF COMMON EQUITY AND WACC AAA Company has a target capital structure of 70% debt and 30% common equity, with no preferred stock. Its before-tax cost of debt is 11%, and its marginal tax rate is 35%. The current stock price is $25.00. The last dividend was $2, and it is expected to grow at a 6% constant rate.
a. What is its cost of common equity?
b. What is its WACC?
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You have been asked to calculate the cost of capital for a company with the following information. The company has $7,500,000 in face value bonds, trading at 96.5% of face value. The YTM on these bonds is 5.75%. The equity beta is 1.75, the expected ..
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