Use for debt when calculating cost of capital

Assignment Help Financial Management

Reference no: EM131555567

Liu Industrial Machines issued 147,000 zero coupon bonds four years ago. The bonds originally had 30 years to maturity with a yield to maturity of 7.2 percent. Interest rates have recently increased, and the bonds now have a yield to maturity of 8.3 percent. If the company has a $46.2 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: EM131555567

Questions Cloud

Percentage of adults : If the true percentage of adults who would choose to sleep when they are at home sick is 74?%, would you be? surprised? Yes or no.

Describe several ways to maintain a safe online profile : Describe several ways to maintain a safe and private online profile. Should employers have the right to search through social profiles of employees?

An advantage of a repurchase : Which of the following is not an advantage of a repurchase?

Find the directions of greatest attraction : Is the origin an attractor, a repeller, or a saddle point of the dynamical system xk+1 = Axk?

Use for debt when calculating cost of capital : what weight should it use for debt when calculating the cost of capital?

How are the personal ethics and corporate ethics interpreted : Learning Activity: Case study- How are the personal ethics and corporate ethics interpreted differently (a) in the USA, and (b) in Japan?

What is the probability of producing : Daily output of Marathon's Garyville, Lousiana, refinery is normally distributed with a mean of 232,000 barrels of crude oil per day with a standard deviation.

Suppose instead that you estimate terminal value of company : What is your estimate of the current stock price. Suppose instead that you estimate the terminal value of the company using a PE multiple.

Illustrate the difficulties of establishing a subsidiary : Initial response- Illustrate the difficulties of establishing and managing a subsidiary in terms of strategic ethical considerations.

User Account

All Pages