K = N |
Bond Price =∑ [(Annual Coupon)/(1 + YTM)^k] + Par value/(1 + YTM)^N |
k=1 |
K =22 |
Bond Price =∑ [(0*2000/100)/(1 + 5.1/100)^k] + 2000/(1 + 5.1/100)^22 |
k=1 |
Bond Price = 669.5 |
Bond MV = price*number of bonds = 669.5*120000=
80340000 |
Total Capital value = Value of Debt + Value of Equity |
=80340000+77000000 |
=157340000 |
Weight of Debt = Value of Debt/Total Capital Value |
= 80340000/157340000 |
=0.5106 |
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