Question

Liu Industrial Machines issued 152,000 zero coupon bonds five 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 $46.7 illon 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

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Price of the zero coupon bondpresent value of the par value of bond $136.23 1000/1.083425) Weight of debt- 0.3072 (136.23*152

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