Question
Ace Industrial Machines issued 136,000 zero coupon bonds five years ago. The bonds have a par value of $1,000 and originally had 30 years to
Ace Industrial Machines issued 136,000 zero coupon bonds five years ago. The bonds have a par value of $1,000 and 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. |
What is the dollar price of the bonds? What is the market value of the company's debt? 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? I got Bond Price=139.42, Market Value= 18,960,831,95, Weight of Debt=0.2960 and it says all are wrong |
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