Use for debt when calculating the cost of capital

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Reference no: EM13917813

DeVille Industrial Machines issued 143,000 zero coupon bonds four years ago. The bonds originally had 30 years to maturity with a 7.3 percent yield to maturity. Interest rates have recently increased, and the bonds now have an 8.4 percent yield to maturity. Required: If the company has a $45.8 million market value of equity, what weight should it use for debt when calculating the cost of capital?

Reference no: EM13917813

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Use for debt when calculating the cost of capital : DeVille Industrial Machines issued 143,000 zero coupon bonds four years ago. The bonds originally had 30 years to maturity with a 7.3 percent yield to maturity. Interest rates have recently increased, and the bonds now have an 8.4 percent yield to ma..

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