None Palencia Paints Corporation has a target capital structure of 40% debt and 60% common equity, with no preferred stock. Its before-tax cost of debt is 8%, and its marginal tax rate is25%. The current stock price is Po = $32.50. The last dividend was Do = $2.00, and it is expected to grow at a 6% constant rate. What is its cost of common equity and its WACC? Do notround intermediate calculations. Round your answers to two decimal places.rs=11.52%WACC =9.31%

Step 1:a)We have to calculate the cost of equity. We have to use the dividend growth model to…

Answered: Palencia Paints Corporation has a…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter12: The Cost Of Capital

Section: Chapter Questions

Problem 3P

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Bayani Bakerys most recent FCF was 48 million; the FCF is expected to grow at a constant rate of 6%. The firms WACC is 12%, and it has 15 million shares of common stock outstanding. The firm has 30 million in short-term investments, which it plans to liquidate and distribute to common shareholders via a stock repurchase; the firm has no other nonoperating assets. It has 368 million in debt and 60 million in preferred stock. a. What is the value of operations? b. Immediately prior to the repurchase, what is the intrinsic value of equity? c. Immediately prior to the repurchase, what is the intrinsic stock price? d. How many shares will be repurchased? How many shares will remain after the repurchase? e. Immediately after the repurchase, what is the intrinsic value of equity? The intrinsic stock price?
Palencia Paints Corporation has a target capital structure of 45% debt and 55% 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 = $35.00. The last dividend was D0 = $2.00, and it is expected to grow at a 4% constant rate. What is its cost of common equity and its WACC?
Palencia Paints Corporation has a target capital structure of 40% debt and 60% common equity, with no preferred stock. Its before-tax cost of debt is 10%, and its marginal tax rate is 25%. The current stock price is P0 = $27.50. The last dividend was D0 = $2.00, and it is expected to grow at an 8% constant rate. What is its cost of common equity and its WACC? Do not round intermediate calculations. Round your answers to two decimal places.
Palencia Paints Corporation has a target capital structure of 40% debt and 60% common equity, with no preferred stock. Its before-tax cost of debt is 13%, and its marginal tax rate is 25%. The current stock price is P0 = $25.00. The last dividend was D0 = $3.25, and it is expected to grow at a 6% constant rate. What is its cost of common equity and its WACC? Do not round intermediate calculations. Round your answers to two decimal places. rs = % WACC = %
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EKAS Corporation has a capital structure target of 40% debt and 60% common stock, without preferred stock. It is known that the pre-tax debt cost rate is 12%, and the marginal tax rate is 40%. If you know the current common share price (P0) is $ 22.50. The last dividend paid (D0) is $ 2.00, and is expected to grow at a constant 7%, what is the cost of common equity and WACC EKAS Corporation?
Palencia Paints Corporation has a target capital structure of 45% debt and 55% common equity, with no preferred stock. Its before-tax cost of debt is 9%, and its marginal tax rate is 40%. The current stock price is P0 = $30.00. The last dividend was D0 = $3.75, and it is expected to grow at a 6% 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. rs = % WACC = %
Pearson Motors has a target capital structure of 30% debt and70% common equity, with no preferred stock. The yield to maturity on the company’s outstandingbonds is 9%, and its tax rate is 40%. Pearson’s CFO estimates that the company’sWACC is 10.50%. What is Pearson’s cost of common equity?

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