Use for debt when calculating the cost of capital

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Bennington Industrial Machines issued 149,000 zero coupon bonds six 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. Required: If the company has a $46.4 million market value of equity, what weight should it use for debt when calculating the cost of capital?

Reference no: EM131015991

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