Use for debt when calculating the cost of capital

Assignment Help Financial Management

Reference no: EM131825544

Liu Industrial Machines issued 154,000 zero coupon bonds seven 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. What is the price of the bonds? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Bond price $

What is the market value of the company's debt? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Round your answer to 2 decimal places, e.g., 32.16.)

Market value $

If the company has a $46.9 million market value of equity, what weight should it use for debt when calculating the cost of capital? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.)

Weight of debt

Reference no: EM131825544

Questions Cloud

Describe the creative and rational process of change : Describe the creative and rational process of change along with how change impacts an organization and the employees within it.

Write a probability model of roulette winnings : If not, you lose the money you bet. Suppose you play 3 times, each time with a $1 bet. Let Y represent the total amount won or lost.

Enough money today to pay for college : You want to make sure that you have enough money today to pay for college over the next 4 years. You find a bank that will pay you 5% interest.

Calculate the probability of male children : Male children. While it is often assumed that the probabilities of having a boy or a girl are the same, the actual probability of having a boy is slightly

Use for debt when calculating the cost of capital : If the company has a $46.9 million market value of equity, what weight should it use for debt when calculating the cost of capital?

What is the probability of rolling : Calculate the following probabilities and indicate which probability distribution model is appropriate in each case. You roll a fair die 5 times.

Problem regarding the playing darts : Calculate the following probabilities and indicate which probability distribution model is appropriate in each case. A very good darts player

What was net capital expenditure : The company’s 2016 income statement showed depreciation expense of $345,000. What was net capital expenditure for 2016?

What are the NPV and IRR of replacement project : What is the net cash flow at time 0 if the old equipment is replaced? What are the NPV and IRR of the replacement project?

User Account

All Pages