Problembennington industrial machines issued 140000 zero, Ask an Expert

Finance

Problem:

Bennington Industrial Machines issued 140,000 zero coupon bonds five years ago. The bonds originally had 30 years to maturity with a yield to maturity of 7 percent. Interest rates have recently increased, and the bonds now have a yield to maturity of 8.1 percent.

Required:

Question: If the company has a $45.5 million market value of equity, what weight should it use for debt when calculating the cost of capital?

Note: Be sure to show how you arrived at your answer.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91148827

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