Use for debt when calculating the cost of capital

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Reference no: EM13917597

DeVille Industrial Machines issued 136,000 zero coupon bonds five years ago. The bonds originally had 30 years to maturity with a 6.6 percent yield to maturity. Interest rates have recently increased, and the bonds now have an 8.2 percent yield to maturity.

If the company has a $45.1 million market value of equity, what weight should it use for debt when calculating the cost of capital?

Weight of debt=? (Round your answer to 4 decimal places (e.g., 32.1616).

Reference no: EM13917597

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