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Cost of common equity and its wacc?
The company's target capital structure of 40% debt and 60% common equity, w/ no preferred stock, The before tax cost of debt is 12% and its marginal tax rate is 40%. The current stock price is 22.50$. The last dividend was 2.00$ and its expected growth rate is 7% constant. What is its cost of common equity and its WACC?
I have read my book and class notes and Im not sure on where to begin solving this problem? Im not asking for the specific answer, but more so help on how to begin solving the problem. |
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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: ...
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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