He bonds now have yield to maturity-weight of debt

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Bennington Industrial Machines issued 138,000 zero coupon bonds seven years ago. The bonds originally had 30 years to maturity with a yield to maturity of 6.8 percent. Interest rates have recently increased, and the bonds now have a yield to maturity of 8.4 percent.

Required:

If the company has a $45.3 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 decimal places (e.g., 32.1616).)

Weight of debt

Reference no: EM13950847

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