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    Nov 26, 2010, 04:59 PM
    Cost of common equity
    Percy Motors has a target capital structure of 40% debt and 60% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 9%, and its tax rate is 40%. Perry's CFO estimates that the company's WACC is 9.96%. What is Percy's cost of common equity?

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Percy Motors has a target capital structure of 40% debt and 60% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 9%, and its tax rate is 40%. Percy's CFO estimates that the company's WACC is 9.96%. What is Percy's cost of common equity? (HINT: ...

Cost of common equity [ 1 Answers ]

Percy Motors has a target capital structure of 40% debt and 60% common equity, with no preferred stock. The yield to maturity on the company's outstand bonds is 9%, and its tax rate is 40%. Percy's CFO estimates the company's WACC is 9.96%. What is Percy's cost of common equity?

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