Pearson Motors has a target capital structure of 30% debt and 70% common equity, with no preferred stock

Finance Dec 25, 2020

Pearson Motors has a target capital structure of 30% debt and 70% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 8%, and its tax rate is 25%. Pearson's CFO estimates that the company's WACC is 11.40%. What is Pearson's cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places.

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