After tax cost of debt=yield to maturity*(1-tax rate)
=9*(1-0.25)=6.75%
WACC=Respective costs*Respective weight
10.3=(6.75*0.3)+(0.7*Cost of equity)
Cost of equity=(10.3-2.025)/0.7
=11.82%(Approx).
Question of 10 Cheek My Work (remaining) eBook Pearson Motors has a target capital structure of 30% debt and 70% com...
Check My Work (5 remaining) eBook 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 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 40% debt and 60% 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 11.40%. 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 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 25%. Pearson's CFO estimates that the company's WACC is 12.90%. What is Pearson's cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places. %