Question
9. Bennington Industrial Machines issued 144,000 zero coupon bonds five years ago. The bonds originally had 30 years to maturity with a yield to maturity
9.
Bennington Industrial Machines issued 144,000 zero coupon bonds five years ago. The bonds originally had 30 years to maturity with a yield to maturity of 7.4 percent. Interest rates have recently increased, and the bonds now have a yield to maturity of 8.5 percent. |
Required: |
What is the price of the bonds?(Do not round intermediate calculations. Round your answer to 2 decimalplaces (e.g., 32.16).) |
Bond price | $ |
What is the market value of the company's debt?(Do not round intermediate calculations. Round your answer to 2 decimalplaces (e.g., 32.16).Enter your answer in dollars, not millions of dollars (e.g., 1,234,567).) |
Market value | $ |
If the company has a $45.9 million market value of equity, what weight should it use for debt when calculating the cost of capital?(Do not round intermediate calculations. Round your answer to 4 decimalplaces (e.g., 32.1616).) |
Weight of debt |
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