Calculate the appropriate weights of debt and equity

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Question: In March of 2016 the capital structure of IT solutions (measured in market values) appears as follows:

Thousands of dollars	Book Value	Market Value
Accounts Payable	50,000	50,000
Common Equity	500,000	750,000
Long-Term Debt	600,000	600,000
Total assets	1,150,000	1,400,000

Calculate the appropriate weights of debt and equity in the capital structure of the company?

Company's common stock currently sells $12.00 per share. The firm pays dividends annually and expects dividends to grow at a constant rate of 3% indefinitely. The most recent annual dividend per share, paid yesterday, is $1.00. Calculate the cost of common equity?

Reference no: EM131993468

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