David ortiz motors has a target capital structure of 40

Reference no: EM13379287

David Ortiz Motors has a target capital structure of 40 percent debt and 60 percent equity. The yield to maturity on the company's outstanding bonds is 9 percent, and company's tax rate is 40 percent. Ortiz's CFO has calculated the company's WACC as 9.96 percent.

What is the company's cost of equity? If the company will pay a constant annual dividend of $2.20 a share, what is the Ortiz's current stock price?

Reference no: EM13379287

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