1. A companys zero coupon bond issue matures in 16 years and has a yield to maturity of 10.60%. Each zero has a face value of $1,000 and there are 4,000 of the bonds outstanding. If the market values the equity at $1,800,000, what capital structure weight for debt would you use in calculating the WACC, assuming the firms only debt consists of the zeros?

1. 0.106
2. 0.299
3. 0.690
4. 0.693
5. none of the above

In the solution of this problem, using a Ti-84 calculator, the inputs are as follows:

N: 16 * 2 = 32 I/Y = 10.6 / 2 = 5.3 PMT = 0 FV = 1000 PV = Solve Where in the problem does it imply that the coupon is semiannual? I know when a problem states that the bond/stock is semiannual, quarterly, etc the N, I/Y and PMT is affected. But I do not see any key words in this problem. Am I missing a concept here?