What weight should use for debt-calculating cost of capital

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Reference no: EM13917718

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.

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? (Round your answer to 4 decimal places (e.g., 32.1616).)

Weight of debt?_____________

Reference no: EM13917718

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