Question: Patton Paints Corporation has a target capital structure of 40 percent debt and 60 percent common equity, with no preferred stock. Its before-tax cost of debt is 12 percent, & its marginal tax rate is 40 percent. The current stock price is Po=$22.50. The last dividend was Do=$2.00, and it is expected to grow at a constant rate of 7 percent. Calculate its cost of common equity and its WACC?