Occam Industrial Machines issued 225,000 zero coupon bonds five years ago. The bonds originally had 30 years
Question:
Occam Industrial Machines issued 225,000 zero coupon bonds five years ago. The bonds originally had 30 years to maturity with a yield to maturity of 5.2 percent. Interest rates have recently decreased, and the bonds now have a yield to maturity of 4.6 percent. If the company has a market value of equity of $120 million, what weight should it use for debt when calculating the cost of capital? Assume semiannual compounding for the bonds.
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The bonds have 25 years to maturity so the price today is P 0 10...View the full answer
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Related Book For 
Essentials Of Corporate Finance
ISBN: 9781265414962
11th Edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
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