A new company called 99 cent sushi has 1000 shares outstanding that sell for $1.8 each and have a beta of 1.2. The stock market is doing rather well and the market return is 15% while the risk free rate is 3.5%. 99 cent sushi has one outstanding bond issued with a Face Value of 2000 and a coupon rate of 10%. The bond has 10 years to maturity and is currently being traded for 108% of its face value. The company is required to pay at 35% tax rate.
Calculate the following:
A) The cost of Equity:
B) The cost of Debt:
C) The capital structure weights (the percentage of the companys combined value that is from equity and debt)