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Biotec has estimated the costs of debt and equity capital for various proportions of debt in...

Biotec has estimated the costs of debt and equity capital for various proportions of debt in its  

capital structure:

% of Debt

Cost of Debt

Cost of Equity

35

5.4%

13.8%

40

5.6

14.0

45

5.9

14.3

50

6.4

14.7

   If Biotec pays a current dividend of $1.50 and expects dividends to grow at a constant rate of 7%, what is the stock price if it obtains its optimal capital structure? What does the capital structure mean?

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jeff jeffy answered 1 year ago
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