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Palencia Paints Corporation has a target capital structure of 30% debt and 70% common equity, with...

Palencia Paints Corporation has a target capital structure of 30% debt and 70% 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 = $31.50. The last dividend was D0 = $2.25, and it is expected to grow at a 5% 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.

  1. rs =  %

  3. WACC =  %

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jeff jeffy answered 2 years ago
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