Question
vital pharmaco has 240000 shares of common stock outstanding at a market price $50 a share. Next year, Vital Pharmaco is expected to pay an
vital pharmaco has 240000 shares of common stock outstanding at a market price $50 a share. Next year, Vital Pharmaco is expected to pay an annual dividend in the amount of $1.80 per share. The dividend growth rate is 3% . Vital Pharmaco also has 18000 bonds outstanding with face value of $1000 per bond. The Bond carry a 9% coupan, pay interest annually and mature in 6 years. The bonds are selling at 99% of face value. The company tax rate is 35%.
-What are the capital Structure weight?
-What is the cost of equity?
-What is the pre- tax cost?
-What is the cost of equity?
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