What is pearson cost of common equity

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1. Pearson Motors has a target capital structure of 35% debt and 65% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 8%, and its tax rate is 40%. Pearson's CFO estimates that the company's WACC is 14.50%. What is Pearson's cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places. %

2. Hook Industries's capital structure consists solely of debt and common equity. It can issue debt at rd = 8%, and its common stock currently pays a $1.75 dividend per share (D0 = $1.75). The stock's price is currently $22.00, its dividend is expected to grow at a constant rate of 7% per year, its tax rate is 35%, and its WACC is 14.25%. What percentage of the company's capital structure consists of debt? Do not round intermediate calculations. Round your answer to two decimal places. %

Reference no: EM132000410

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