3. 4. Click here to read the eBook: Basic Definitions Click here to read the eBook: The Cost of Retained Eaminas, rs COST OF COMMON EQUITY AND WACC Palencia Paints Corporation has a target capital structure of 35% debt and 65% common equity, with no preferred stock. Its before-tax cost of debt is 12%, and its marginal tax rate is 40%. The current stock price is Po = $31.50. The last dividend was Do = $3.50, and it is expected to grow at a 7% 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. a. rs = 11.88 % b. WACC = 9.20 % Hide Feedback Incorrect Check My Work (3 remaining) 0 Icon Key Problem 10.08 Question 4 of 4 Save Submit Assignment for Grading