PPP Inc. is expected to pay a $1.5 dividend at year end, the dividend is expected...

 

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PPP Inc. is expected to pay a $1.5 dividend at year end, the dividend is expected to grow at a constant rate of 5% a year, and the common stock currently sells for $40 a share. The before-tax cost of debt is 7%, and the tax rate is 40%. The target capital structure consists of 50% debt and 50% common equity. What is the company's WACC if all the equity used is from retained earnings? PPP Inc. is expected to pay a $1.5 dividend at year end, the dividend is expected to grow at a constant rate of 5% a year, and the common stock currently sells for $40 a share. The before-tax cost of debt is 7%, and the tax rate is 40%. The target capital structure consists of 50% debt and 50% common equity. What is the company's WACC if all the equity used is from retained earnings?