Target capital structure of debt and common equity

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Cost of Common Equity

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 11%, and its tax rate is 40%. Percy's CFO estimates that the company's WACC is 13.40%. What is Percy's cost of common equity? Round your answer to two decimal places.

Reference no: EM131058306

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