K = N |
Bond Price =∑ [(Annual Coupon)/(1 + YTM)^k] + Par value/(1 + YTM)^N |
k=1 |
K =24 |
Bond Price =∑ [(0*2000/100)/(1 + 5.3/100)^k] + 2000/(1 + 5.3/100)^24 |
k=1 |
Bond Price = 579.09 |
MV of debt = price*bonds = 579.09*140000
=
81072600 |
Total Capital value = Value of Debt + Value of Equity |
=81072600+80200000 |
=161272600 |
Weight of Debt = Value of Debt/Total Capital Value |
= 81072600/161272600 |
=0.5027 |
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