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22-10-2022
Business

Answered

Occam Industrial Machines issued 110,000 zero coupon bonds 6 years ago. The bonds originally had 30 years to maturity with a yield
to maturity of 5.9 percent. Interest rates have recently decreased, and the bonds now have a yield to maturity of 5 percent. The bonds
have a par value of $2,000 and semiannual compounding. If the company has a $75.4 million market value of equity, what weight
should it use for debt when calculating the cost of capital?

Answer :

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