What is cost of common equity and wacc

Assignment Help Financial Management

Reference no: EM131931830

COST OF COMMON EQUITY AND WACC

Palencia 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 13%, and its marginal tax rate is 40%. The current stock price is P0 = $34.50. The last dividend was D0 = $3.25, and it is expected to grow at a 7% constant rate. What is its cost of common equity and its WACC? Round your answers to two decimal places. Do not round your intermediate calculations.

rs = %

WACC = %

Reference no: EM131931830

Questions Cloud

What is the default risk premium on the corporate bond : Assume that the liquidity premium on the corporate bond is 0.75%. What is the default risk premium on the corporate bond?

Use risk-neutral approach to price one-year call : Use risk-neutral approach to price the 1-year call and 1-year put option on XYZ Corp with the strike price of $105.

Calculations of risk-neutral option pricing approach : How risk-neutral assumption greatly simplifies the calculations of risk-neutral option pricing approach.

What is the yield on seven-year treasury note : The maturity risk premium is estimated to be 0.05(t - 1)%, where t = number of years to maturity. What is the yield on a 7-year Treasury note?

What is cost of common equity and wacc : The last dividend was D0 = $3.25, and it is expected to grow at a 7% constant rate. What is its cost of common equity and its WACC?

What is the amount of each of the additional payments : What is the amount of each of the additional payments he must make for his plan to work out?

They need to save at the end of each month to fund five year : Approximately how much do they need to save at the end of each month to fund five years of college for Thornton?

Simplicity are investing in only two assets : You are a portfolio investor and, for simplicity, are investing in only two assets.

Total appraised value of the town taxable property : Suppose that properties in Paragon are not reassessed for tax year 2010, but new construction increases the total appraised value of the town’s taxable property

User Account

All Pages