Percy Motors has a target capital structure of 40 percent debt and 60 percent common equity, with no preferred stock. The yield to maturity on the company’s outstanding bonds is 9 percent, and its tax...

Percy Motors has a target capital structure of 40 percent debt and 60 percent common equity, with no preferred stock. The yield to maturity on the company’s outstanding bonds is 9 percent, and its tax rate is 40 percent. Percy’s Chief Financial Officer estimates that the company’s WACC is 9.96 percent. What is Percy’s cost of common equity?