Bennington industrial machines issued 136000 zero coupon, Ask an Expert

Finance

Bennington Industrial Machines issued 136,000 zero coupon bonds five years ago. The bonds originally had 30 years to maturity with a yield to maturity of 6.6 percent. Interest rates have recently increased, and the bonds now have a yield to maturity of 8.2 percent.

a) What is the price of the bonds?

b) what is the market value of the company's debt?

c) If the company has a $45.1 million market value of equity, what weight should it use for debt when calculating the cost of capital?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91797090

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