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What are the capital structure weights

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Reference no: EM133001322

Vital Pharmaco has 240,000 shares of common stock outstanding at a market price of $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 18,000 bonds outstanding with a face value of $1,000 per bond. The bonds carry a 9 % coupon, pay interest annually, and mature in 6 years. The bonds are selling at 99 % of face value. The company's tax rate is 35 %. Circle the final answer(s) for each of the items below.

a) What are the capital structure weights?

b) What is the cost of equity?

c) What is the pre-tax cost of debt?

d) What is the after-tax cost of debt?

e) What is Vital Pharmaco weighted average cost of capital?

Reference no: EM133001322

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