Biotec has estimated the costs of debt and equity for various proportions of debt in its capital structure Of the 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 00 and expects the dividend to grow at a constant rate of 7 , wh...

Answer Solution i The optimal capital structure is the one which minimizes the ...

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

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

% Of the 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 $1.00 and expects the dividend to grow at a constant rate of 7%, what is Biotec's stock price given its optimal capital structure?

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Contemporary Financial Management

ISBN: 978-1337090582

14th edition

Authors: R. Charles Moyer, James R. McGuigan, Ramesh P. Rao

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Posted Date: Feb 23, 2023 01:07 AM

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

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