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 10%, and its tax rate is 25%. Pearson's CFO estimates that the company's WACC is 11.30%. What is Pearson's cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places.
WACC=(Weight of equity)*(Cost of equity)+(Weight of debt)*(Cost
of debt)*(1-tax)
11.30%=(65%)*(Cost of equity)+(35%)*(10%)*(1-25%)
11.30=(65)*(Cost of equity)+(35)*0.075
11.30=(65)*(Cost of equity)+2.625
11.30-2.625=(65)*(Cost of equity)
8.675=(65)*(Cost of equity)
Cost of equity=8.675/65=0.133461 or 13.35% (Rounded to two decimal places)
Pearson Motors has a target capital structure of 35% debt and 65% common equity, with no...
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 25%. Pearson's CFO estimates that the company's WACC is 12.10%. What is Pearson's cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places.
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eBook Pearson Motors has a target capital structure of 35% debt and 65 % commaon equjty, with no preferred stock. The yield to maturity on the company's outstanding bonds is 12%, and its tax rate is 25 % . Pearson's CFO estimates that the company's WACC is 12.60%. What is Pearson's cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places.
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Pearson Motors has a target capital structure of 45% debt and 55% 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 12.60%. What is Pearson's cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places. ______%
Pearson Motors has a target capital structure of 45% debt and 55% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 11%, and its tax rate is 25%. Pearson's CFO estimates that the company's WACC is 10.60%. What is Pearson's cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places. % ?
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