None Pearson Motors has a target capital structureof 35% debt and 65% common equity, withno preferred stock. The yield to maturity onthe company's outstanding bonds is 11%,and its tax rate is 40%. Pearson's CFOestimates that the company's WACC is14.90%. What is Pearson's cost of commonequity? Do not round intermediatecalculations. Round your answer to twodecimal places.

Given information: Weight of debt (wd)=35%Weight of equity (we)=65%Yield to maturity(kd)=11%Tax…

Answered: Pearson Motors has a target capital…

Pearson Motors has a target capital structure of 35% debt and 65% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 11%,

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter13: Capital Structure Concepts

Section: Chapter Questions

Problem 4P

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