1. Calculate the market value of

each bond

2. Calculate total market value of the outstanding bonds

3. Calculate the weighted average cost of debt using the book value weights and the market value weights

4. Does it make it a difference in this case if you use book value weights or market value weights?

Bond #1

Coupon rate: 1.50%

Maturity Date: 06/01/2018

Last trade price: $152.25

Last trade yield: -16.730%

Outstanding book value: $660,000,000

Original Maturity size: $600,000,000

Face value: $1,000

Bond#2

Coupon rate: .250%

Maturity Date: 03/01/2019

Last trade price: $84.38

Last trade yield: 6.059%

Outstanding book value: $920,000,000

Original Maturity size: $800,000,000

Face value: $1,000

Bond #3

Coupon rate: 1.250%

Maturity Date: 03/01/2021

Last trade price: $78.32

Last trade yield: 6.401%

Outstanding book value: $1,380,000,000

Original Maturity size: $1,200,000,000

Face value: $1,000